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UPST zoomed up 13.7% today on no news. I think the recent improved inflation report, strong job numbers, and the older news of UPST having significant funding available have combined for some of the heavy short interest to back away from their position, buying to cover before they lose even more money.

I'm happy to report that today's move has put me back in the black on my UPST position. I had a couple of buys at prices in the low-mid 70s, then another chunk at ~$30. I did not have the nerve to buy more when it dipped into the low teens, but I'm glad I didn't give up.

The long term story remains to be told, but I think they have a bright future.

First off, congrats for getting back to black!!! Many more happy returns to you.

This short interest is a real head-scratcher. While the price went up 169% from
the 5/9 earnings call and the $4 billion announcement to the end of June, the short
interest actually increased from 36% of float to 39% of float! No short
squeeze there. Short sellers seem entrenched.

At the end of July we'll see what the short interest was on July 14th. Given the
attitude of short sellers so far, I'd be surprised to see the short interest
significantly lower. I'm guessing it's not a short squeeze -- yet -- but rather
accumulation by some large player(s). But all speculation as this is way beyond
my pay grade.

Ears <long Upstart>

"I'm happy to report that today's move has put me back in the black on my UPST position."

Congratulations BenSolar. Very few could apply that level of patience with everyone that I know selling out of UPST fairly close to the bottom. I sold my small pos early in the year and missed out not he 320% rise year to date. I wrote pos to mean position but in my mind it might have meant the other abbreviation at the time. This shows how important it is to understand a firm, which lacked an understanding of so it made it easier to sell out.

Thanks, guys. It does feel good to get back positive after being so far under water.

Ears, it certainly could be some larger players buying UPST on the positive news, as opposed to short selling. The stock certainly seems ripe for a short squeeze, though. The Robinhood/Gamestop crowd would have a ripe target here, IMO, if they wanted to pile in on the long side to burn the shorts.

I suppose I should be developing some 'too rich for my blood' sell targets in case that kind of scenario unfolds. I wouldn't want to ride it into the stratosphere and back down without taking profits if it advances far beyond any reasonable valuation.

I suppose I should be developing some 'too rich for my blood' sell targets...

That's an excellent point. It's difficult to justify even the current price given what
it will take for them to just break even this year. The coming quarter's results should
give us a much better idea how to model the business going forward.

I backed up the truck at $13 to add more to my position. The market expectation was way
too low at that point for a company with reasonably transparent financials and such
manageable fixed expenses. I'll be VERY reluctant to sell, even if it appears unreasonably
overvalued in the coming year. But that's just me, certainly not advice for anyone else.

Ears

Yeah, I bought my shares with the intent to hold long term, so I will tolerate some fair bit of 'unreasonable overvaluation', but if the Robinhood/Gamestop crowd piles in and it zooms crazy high during a serious short squeeze, I'll plan to take profits and get back in lower.

I know that current prices are hardly supported by recent or projected non-existent earnings, but I think the pathway is clear to significant and rapidly growing profits. I was drawn into the investment by the combination of a compelling story of past and potential future rapid growth with a huge target market, along with actual profitability. Fiscal year 2021 they reported $1.43 earnings per diluted share, with that diluted share count quite a bit higher than it is now (94.8 million compared to 81.9 million recently thanks to stock buybacks).

BenSolar, what you say makes a lot of sense. The difficulty for me is translating that into
action. It's so easy for me to fall into the trap of price anchoring with Upstart. They've
certainly run the gamut with price so I find there's a shocking number of places to anchor!

My guidepost has always been value. But in this case it's almost impossible for me to value
Upstart right now. The coming earnings release should have enough information to give me
a better stab at their value, but by then probably too late because the market will react
instantly.

Have you given any more thought about targets where you would sell and what your reasoning
is for those targets? What is crazy high for you? Would love to hear your thoughts.

Thanks,
Ears

It's so easy for me to fall into the trap of price anchoring with Upstart. They've
certainly run the gamut with price so I find there's a shocking number of places to anchor!...

Have you given any more thought about targets where you would sell and what your reasoning
is for those targets? What is crazy high for you? Would love to hear your thoughts.


Hi Ears, I wanted to get back to you, though I don't have anything substantive to report. I agree with you about the anchoring. I know it's a problem for me and for most investors.

R.e. valuation, when I bought it the first time, in the $70s, it had come down in price a huge amount from it's peak. I looked at the company and saw real earnings and what looked like a tremendous growth opportunity, I pulled the trigger when it was about PE 50, believing that they could grow into that valuation and more within 5-10 years. Now, of course, UPST has a long way to go to get back to diluted earnings of $1.43 per share, and certainly the business environment has changed a huge amount with interest rates and the fountain of free money from the US government stopping.

We're getting back close to my original purchase point, and I still believe in the thesis under which that I bought the stock, though the business has been through a very rough patch I also see them continuing to execute in important ways, i.e. auto loans.

So ... I need to work on clarifying my thinking on potentially selling, but if the Gamestop/Robinhood bunch decided to punk the short sellers and we quadrupled from here in 2023, revisiting the prior heights, as a wild hypothetical, I feel like I should be selling and rebuying lower. It's hard to imagine the business results in the next few years that would allow the business to catch up to such valuation.

All good thoughts, much appreciated!

I suppose I should be developing some 'too rich for my blood' sell targets in case that
kind of scenario unfolds. I wouldn't want to ride it into the stratosphere and back down
without taking profits if it advances far beyond any reasonable valuation.

Prophetic words, BenSolar. I think we're seeing a short squeeze in response to anticipated
interest rates next year. They certainly are far beyond any reasonable valuation right now,
based on past performance and current outlook, imo. But I'm so often wrong.

Ears <long UPST>

Heck of a rally. Another 10% and I'll be back to even again, lol.

I haven't made any effort to develop those sell targets I mentioned.

I guess it's still a story stock. Interest rates dropping will provide a tailwind for their earnings, no doubt, and I still buy the story of immense addressable markets, which they seem to be making progress toward addressing. Love the home equity line of credit product.

So I'm still holding on. If it skyrockets to a double from here or something ridiculous like that, I'll think about selling more seriously than I am now.

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