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Upstart is a fascinating company to me, and, I think, to many others. It's now a small-cap: $1 billion market cap, but in the not very distant past that number was a LOT bigger. They are applying AI to the business of qualifying people for loans, serving as a matchmaker between lender and borrower, taking a small slice of the pie.

They were a popular Saul stock (hyper-growth investor with a large following at https://discussion.fool.com/c/investment-analysis-... ), a company that had incredible growth and actual profits! The latter, along with the growth and a compelling story, enticed me into becoming a shareholder.

Then over the last year, their business dried up with the rate hikes and lenders/investors fearing a coming recession, so they're losing money now, but are still expanding from their first and largest market, personal loans, into auto lending, small business lending, small dollar amount lending, and they intend to move into the biggie: mortgage lending. Maybe they'll rebound in a huge way when the interest rate and lending environments improve?

Anyway, there was never an UPST board at the Fool, and Saul banned discussion on his board since it wasn't a growth stock anymore. I'd like to see if we can get some discussion going here.

I'm looking forward to Shrewd investors' thoughts on Upstart!

Thanks for the initiative!

Let me start off by just saying I'm still holding this company, and so I'm happy to finally see a UPST board! That said, my reasons are a bit peculiar, since I can think of lots of other companies I have more faith in: It's a tiny memorabilia position, that serves as a constant reminder that one of the most expensive mistakes is not letting go when the story changes for the worse.

Irrational perhaps, but it's one of many 'tricks' in my quest to eliminate the highest risks when in comes to my portfolio: Me, myself and I.

But of course, I'm not running a museum, so it's not the only reason and I'm still interested in the company.

Shrewd on!

Hi Ray,

I bought Upstart in two chunks, in late-ish April and then again in May after a sharp drop, so I got in far lower than the peak, with an average price per share of ~$49. Still it has been a brutal drop from there as the business continued to deteriorate, and in hindsight it's easy to see I should have just ditched it.

But, it's always harder to make decisions in the present, with the future unknown, and I continue to hold, still believing in the business plan, technology and leadership team. I'll write more about the company later.

Ben

I LOVED Upstart. (I know I'm not supposed to.) In my mind, it was a great idea -- applying AI to loans. They were early so had much more data than any new competitors, or even large individual banks that might want to do it alone. They could replace FICO scores with something so much better. In my mind, FICO was a significant worry, but otherwise it seemed like they could have lots of runway for a long time as they entered new lending segments.

Then came the earnings call when they said they had retained loans on their books not for improving their models as in the past, but because they'd been unable to sell loans they'd made. I felt I had been utterly betrayed. I sold my enter stake that day and was so disheartened I stopped following them entirely.

I get that the credit markets seized up in a way they hadn't predicted. Their mistake, but entirely understandable and forgivable. Book the loss, make adjustments so it doesn't repeat, then carry on. But instead, they changed their business model entirely -- and for the worse. Previously they had been small and limber. They sold loan models/information. Overnight they went from limber to lumbering, something more akin to a bank than an AI tech company with a great edge.

I get that the credit markets seized up in a way they hadn't predicted. Their mistake, but entirely understandable and forgivable. Book the loss, make adjustments so it doesn't repeat, then carry on. But instead, they changed their business model entirely -- and for the worse. Previously they had been small and limber. They sold loan models/information. Overnight they went from limber to lumbering, something more akin to a bank than an AI tech company with a great edge.

I understand your point of view, but I don't see their funding some loans to keep flow moving as changing the company so drastically as you say, so long as it doesn't come anywhere remotely close to putting their liquidity in danger, which it seems so far it has not.

Their goal is to get back to more of a pure market maker/facilitator role in the future. Zero intention of becoming a bank, according to their public comments.

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