Bluechip
Value Investor, Short Seller
Pagaya, Upstart and Root are money-losing companies, not a rebound story. They pay no dividends, so their yield is zero, and any comparison with the 2021 SPAC-peak mania is not a long-term trend. This rebuts a post the author replies to, which argued these fintechs show steady quarter-over-quarter EPS growth on sustainable revenue, trade at 10-year lows with rising dividend yields, and could 2x or 3x. x.comÂ
Pagaya is still a credit business with a questionable moat, even if execution is good. There are too many world-class businesses out there to spend time convincing yourself an average one is exceptional; a proprietary model and a P/E of 4 do not make a wide moat. x.com x.comÂ
Pagaya is one of the cheapest stocks in the market, but its 15% short float shows the market still expects more downside than upside. Micron is the only name that currently makes financial sense. x.comÂ
Pagaya's AI credit-decisioning infrastructure, which connects lenders with borrowers more efficiently, looks underpriced by a market still figuring it out. Revenue has compounded at roughly 20%+ for years with steady quarterly growth and further acceleration expected. Banks want better underwriting and consumers want credit access, and Pagaya sits in the middle, so the model scales if it executes on expanding partnerships. It remains a higher-risk name with real upside. 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
Upstart has no AI underwriting moat; it is simply winning fewer personal-loan customers in a higher-rate environment while spending heavily. Originations rose 61% to $3.4 billion on auto (+300%) and home (+250%) with personal loans flat, but it returned to a GAAP net loss as contribution margin fell to 50% from 55% and operating expenses rose 45% to about $316 million. If the 10-year stays above 4.4%, a 55x P/E faces brutal valuation gravity, though hitting the $294M EBITDA guide would help. … Show more
Pagaya may be one of the most misunderstood AI stocks: an AI-powered lending network still priced like a broken fintech. It trades at a single-digit P/E while turning profitable and scaling margins. It is high risk and high beta, with potentially asymmetric upside. 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
Pagaya's strong quarter is rightly being ignored by the market, because Treasury yields are threatening to break out, which means more credit risk. @ThothCapital, in the post being answered, highlights a huge revenue beat, net income at the high end of guidance and raised guidance for revenue, adjusted EBITDA and net income. x.comÂ
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 should make a big comeback once interest rates come down, since high rates are what really hurt the stock. x.comÂ
