Investing General Discussion

tugofpeace said:

I don't think it's a red flag, I think it's a stock that was shorted for good reasons - interest rates killed the profitability of the stock, and the future of interest rates remains uncertain. However the recent surprise EPS makes me think the stock should be higher.

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Ok, i can use a short diversion since tax returns are currently melting my brain.

UPST
Upstart Holdings, Inc., together with its subsidiaries, operates a cloud-based artificial intelligence (AI) lending platform in the United States. (AI... Gotta have it in 2025)

% of float shorted : 22.13%
Public Float: 81m shares. Of which 17.9m are sold short

Sales: Sales were flat '21 - '22 and dropped 39% '22 - 23. In '24 sales went up to 628m but are still down 25% from '22 (214m).


SG&A Expense: They are spending the same on SG&A expense at 628m in sales that they spent in 2021 doing 846m in sales.


EPS: in 2021 they were actually profitable doing 846m in sales. Somehow from 2022 onward, they have found a way to go from being profitable to losing money per share.
<deleted as I have too many attachments> They made over a buck a share in 2021 and now lose 1-2 bucks a share each year since.

Assets are going in the right direction.


But...Total debt has doubled in 3 years.


Cash Flows: after two years of hemorrhaging cash, it looks like they stemmed the bleeding in '24.


I have no idea what happened to them in 2022, but it was ugly and they still haven't recovered. I know zero about them in terms of business model and had no opinion of them since I had never heard of them, but looking at their financials I can definitely see why they have a quarter of the float sold short. Sales are still down 25% from 2021. One good quarter of results doesn't erase that (if those results were really something that could be called good).

They are in a space that's going to get nothing but more crowded. SOFI makes a profit in the same space. If you are surprised this stock hasn't "taken off" then perhaps you didn't look at it deep enough. This was a $80-100 stock back in '21 when it was doing 850m in sales and making a 1.5 per share in profit. People bought it up to $400 when sales had plateaued but SG&A expenses went up 50%. That was the real red flag right there. They spent 50% on SG&A and got absolutely dick in sales out of it. The stock shot to $400 and smart money got the fuck out of the door before the Q4 numbers got announced leaving the bagholders to enjoy their sub $100 stock less than 3 months later. $400 in Oct '21 and under $100 in Jan '22

That's what I see on UPST. You might see something different.

Gravel said:

I hold a special place for Edward Jones.

We invested what little we had saved up in our early 20s. The advisor wanted us to buy shares in some bullshit American funds that had something like a 5% front load fee, and then I want to say a 1-2% annual management fee after that.

But wait, it gets better! The place we went seemed to keep changing advisors, and each one wanted to put us in "their" funds, so we got to keep incurring these same types of fees every time. Happened like 3 times.

I guess we kind of lucked out because from 2008 to 2012, we basically didn't have enough excess income to invest so it just sat there. Found the early retirement community in 2014 through bodybuilding.com's misc, and from then on I self managed it all.

I've never gone back to see just how much money they cost us, but I imagine it was significant. We had around $80k when we finally moved it from Edward Jones.

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When Daniel Kahneman told WallStreet Advisors they we actually worse than a coin flip over the years he studied their data (at their request no less), you think it would have been a wake up call. Newp.

Gravel said:

That's the problem, most people don't care enough to look into it. You just assume someone you're paying to do it for a "reputable" business wouldn't be fucking you.

Shit, I even went and got a finance degree in that timeframe and still didn't think to look into it further.

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If you have never read Kahneman's "Thinking Faster and Slow" its an enjoyable read. Covers a whole gamut of research he did (including that bit on WallStreet).

But you would think when you get your year end statement and it says "You lost $20,000 fucking dollars this year" one might at least ask a question or two. I mean even the shitty MSM talks about the markets come end of the year so they might have actually heard how the indexes did.