Subject: Re: Upstart's cash burn
Great post, ears! Thank you for breaking down the origin of the CFO's cash burn projections and laying out how they apply to current conditions.

Of course we expect Upstart will bring in some revenue this year, even if drastically lower than last year, so the 1.5 year coverage should easily extend past 2 years. They also should have the ability to do a fire-sale of some of the loans on their books, if they had to. They might take a sizable loss, but some significant portion of that ~$1 billion in loans should be convertible to cash in a pinch.

Recent economic news has not been good for Upstart in the short term, though it's somewhat mixed. The economy's continued strength (i.e. strong job growth) means that short term interest rates may go higher and stay up longer than we hoped a few months ago. That devalues the loans on Upstart's books and also makes it tougher for them to write new loans. Short term banking rates (CD interest rates) have been surprisingly stable the last month and a half, but mortgage rates climbed at all durations from 5/1 ARM to the 30 year mortgage.

On the other hand, economic strength is good for the company in that more of their customers can keep paying on their loans and afford to take out new loans if they have a good job.

A wild card that's entered the conversation in the last week is the collapse of Silicon Valley Bank and the abrupt closure of Signature Bank. There's at least some chance that these could be the initial rumblings of wider problems, though that seems unlikely at the moment. They do probably serve as a warning signal to the Fed not to jack up rates too high.

I'm also still holding on long to UPST.