Upstart - A Coiled Spring
As the title suggests, this article will be slightly biased toward the bullish side so take it as you may.
What changed?
1. Stock Price
Since my last Upstart post on 30th July 2021, the stock went through one helluva rollercoaster ride. The stock went from $20 (IPO) → $400 (Peak) → $22 (Now)
For record’s sake, and for you to mock me, I sold all my shares at the red arrow and bought back in at the green. Talk about bad timing...
2. Business Growth
Since my last post, Upstart has been consistently onboarding new banks and credit unions at a rate of about 1 or 2 per month.
On top of that, Upstart Auto Retail partnered with well-known car manufacturers such as Volkswagen, Subaru, and Honda to build out their digital retail platform.
Upstart AI Lending on Salesforce AppExchange
Aimed to bring AI-enabled lending to the financial services industry, this integration can help financial institutions modernize lending, stay competitive, and provide better customer service to clients.
Despite the rollercoaster stock price, there is no doubt that Upstart’s business is firing on all cylinders.
A Coiled Spring
The floodgates won’t hold forever
Upstart is executing well but its revenue isn’t growing because they operate in a cyclical industry. Banks are scared to loan out money, and people are unwilling to take on a loan with higher interest rates which cause the lending market to run dry. This is arguably the worst economic situation for Upstart.
However, once the fed pivots and interest rates come back down, the floodgates will open once more and Upstart, with more bank/credit union partners than ever before, will see their revenues explode comparable to what we saw from 2020 → 2021.
AI Model forged in the flames of battle
Another factor that will propel Upstart’s growth is if its AI Model proves able to outperform after coming out of this credit cycle. They will be the only ones who have a PROVEN model and new entrants would have to wait at least another credit cycle to compete with Upstart. When that happens, guess how many other banks/credit unions will come knocking on their door?
There are currently 4418 banks and 4800 credit unions in the U.S. while Upstart currently only has 71 on its platform… I shall leave the rest up to your imagination.
What is Lionvestor doing?
I have been executing my Cash-secured Put options strategy as shared in my previous post, receiving premiums while I wait for the price to hit $20. So far, I have been receiving option premiums for 3 months, which amounts to about a 10% gain per month but I haven’t been forced to buy the shares because the price didn’t go below $20 at the time of my option expiry.
I will continue to execute this strategy until I’m assigned the shares at $20.
On top of that, since I am holding a couple of hundred shares, I concurrently sold covered calls at a strike of $33 to earn extra option premiums.