Joel
Long-Term Growth Investor & Options Trader
Upstart's earnings look very strong, so a continued selloff looks like a buying opportunity unless something serious was missed. Nearly all of the bottom-line miss came from heavy sales and marketing spending to drive adoption of its new home loans business, spending that serves long-term investors rather than impressing day traders. x.com x.comÂ
Upstart offers a second chance to follow insider buying. In May the director and CEO bought $6.5M of stock combined at around $25-27; shares rebounded as high as $37 and have since round-tripped back to about $27. x.comÂ
Upstart is stuck near its 52-week low, and nothing will help it without rate cuts, which look unlikely anytime soon. x.comÂ
Upstart still looks worth holding at 13x next-twelve-month EBITDA, given expected growth of about 44% a year for the next four years. x.comÂ
A clearing of the gloomy environment will make lending stocks the next multibaggers. SoFi, Upstart and Klarna are down now, much as many cybersecurity stocks were before rising two- to fourfold in under six months. Better Home & Finance (-75% YTD), LendingTree (-55%) and Rocket (-47%) join them among lending names whose current prices will look dirt cheap in 2028-2029. x.com x.comÂ
Upstart remains weighed down by worries over delinquency rates despite growing numbers, because it relies solely on lending. A safer route is fintech companies that don't depend only on lending, where investors feel more confident. x.comÂ
Better Home & Finance is now the favorite lending tech company, even over Upstart, though riskier because it is still very early. Its HELOC with a credit card turns home equity into a revolving credit line, making borrowers long-term customers and generating fees, and a Coinbase partnership lets borrowers use bitcoin or USDC as loan collateral. It grows at 40% yet trades at half Upstart's valuation, with fair value estimated at $40-50. x.comÂ
Personal-loan economics and demand holding up despite interest rates should support Happen Bank's shares tomorrow. SoFi's good earnings provide the read-through. After rising two-year rates beat down Happen Bank's shares, a healthy personal-loan marketplace would offer asymmetric upside at 8x earnings with decent growth. x.com x.comÂ
Upstart has zero moat, and a lending platform supposedly so much more efficient than traditional methods should not be losing money. @mukund notes it is intentionally burning capital to blitz-scale into home and auto lending, and that at a 55x P/E, a 10-year yield above 4.4% is a brutal headwind. x.comÂ
Rate-hike fears are dragging down the whole lending sector, making Figure Technology look like a bargain around $25. That sector selloff could offer an opportunity over the next few months. x.comÂ