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IPO Upstart Holdings

Leading lending platform
IPO
Medium risk

Revenues in 9M 2019 — 9M 2020

Invest in IPO Upstart Holdings

This investment idea is no longer available. New applications are not accepted

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Investment Idea Details
The Company

Upstart Holdings applies modern data science and technology to the process of originating consumer credit. The сompany helps bank partners originate credit by providing them with a proprietary, cloud-based, artificial intelligence lending platform. As the сompany’s technology continues to improve and additional banks adopt the Upstart platform, consumers benefit from improved access to affordable and frictionless credit. The company was founded in 2012 in San Francisco.

Since inception, bank partners of Upstart have originated over 620,000 personal loans that have generated more than 9 million repayment events. Approximately 70% of Upstart-powered loans are entirely automated. The company has 10 bank partners. Cross River Bank originated 72% of the loans facilitated on Upstart platform and fees received from Cross River Bank accounted for 65% of the total revenue.

Market Opportunity

With $3.6 trillion of consumer credit originated between April 2019 and March 2020, credit is a cornerstone of the U.S. economy. Access to affordable credit is central to unlocking upward mobility and opportunity. Reducing the price of borrowing for consumers has the potential to dramatically improve the quality of life for millions of people.

Upstart has focused on the unsecured personal loan market, one of the fastest-growing segments of consumer credit. From April 2019 to March 2020, there were $118 billion in U.S. unsecured personal loan originations, representing 8% growth over the prior year. In the same period, Upstart facilitated the origination of $3.5 billion in unsecured personal loans, or less than 5% of the total market. The company not only has a large opportunity to capture market share in unsecured personal loans, but by applying AI models and technology to adjacent opportunities, Upstart is well-positioned to address the U.S. auto loan, credit card and mortgage markets.

Risks

Revenue growth rate and financial performance in recent periods may not be indicative of future performance and such growth may slow over time. Upstart has incurred net losses in the past, and may not be able to maintain or increase profitability in the future.

If existing bank partners were to cease or limit operations with Upstart or if Upstart is unable to attract and onboard new bank partners, the business, financial condition and results of operations could be adversely affected.

Quarterly results of Upstart are likely to fluctuate and as a result may adversely affect the trading price of common stock.

Financials

Upstart (UPST) plans to sell 12 million shares at a price range of $20 to $22. The company intends to raise as much as $260M in an IPO of its common stock at about $1.9B valuation. Upstart has raised a total of $144.1M in funding over 6 rounds from 22 investors, such as Founders Fund, Khosla Ventures, Kleiner Perkins, Google Ventures, New Enterprise Associates and Marc Benioff (founder and CEO of Salesforce).

The company booked $209M in revenue for the last 12 months. The revenue grew by 44% YoY in the first 9 months of 2020. The company’s revenue consists primarily of fees paid by banks. Upstart charges banks referral fees for each loan referred through Upstart platform and originated by a bank partner, platform fees for each loan originated (regardless of its source) and loan servicing fees as consumers repay their loans. Upstart is asking investors to pay 9x sales with revenue growth of 44% and profitability, which is a reasonable valuation. This investment idea has a high potential return of more than 40%.

How IPO Investments Work
1. Collection of funds

2-3 weeks before the start of the company publishes information about the opening of trading: financial statements for 3 years, a description of the company's business, plans for the future, as well as the risks that management sees in their own business. We analyze such offers and publish the best ones. Investors apply for deposits. Before the deadline for applications, you can change the request or cancel it.

Publication
14 Dec
Threshold amount
$50
2. Buy shares

We submit one large application for the purchase of shares by pre-subscription with reduced price to large investors. The application may be rejected in part or in full. Over the past three years, our applications have been rejected only three times. The next day, or every other day, we'll know at what price and at what percentage the order is executed, and we'll post it on «The my investment page».

Submit applications before
15 Dec
3. Start Bidding

The price of shares is rising from the first day due to the demand of investors deprived of the opportunity to buy shares before trading. Most of the stocks we've been recommending buying over the past three years have been starting to trade on the stock exchange at tens of percent higher than the price at which customers bought the shares. There comes a Lock up period when it is forbidden to sell shares purchased by subscription. Typically lasts 3 months.

Start Bidding
16 Dec
Return forecast
More than 40%
4. Receiving profit

After the expiration of the Lock Up period, the investment is automatically closed and the investor receives a profit on account of the deduction commissions UT. You can always view the results of your past investments in investment archive.

End
22 Mar
Early profit fixation

Although no shares are allowed to be sold during the lock-up period, our traders seek to offer investors fixed profit by way of using various financial instruments, including forwards, options, short positions etc.

From the investor’s point of view this means that he or she may close an investment by paying a certain part of its value (as a rule, approximately 15 percent). This is due to high prices for the instruments which are employed to ensure availability of fixed profit. As such, you shall press any relevant button in the Investor Account as soon as it is active.

The closing procedure is similar to commencement of investment business. You shall file a bid which is executed within a business day by UT. So, your investment is closed at the price currently prevailing on the stock exchange. However, we rarely recommend using this feature, since upon expiry of an applicable lock-up period the average performance is higher.

Fee

FOR ENTRY

3 per cent of the share price. This fee is charged as soon as your investment bid is confirmed.

FOR EXIT

1.75 per cent of the purchase price paid for your shares as soon as trading is closed. This fee is charged upon closure of any relevant investment.

SUCCESS

20 per cent of the profit your derive. This fee is charged only if you show positive performance as of the moment any relevant investment is closed.

TO EARLY EXIT

Usually, 15 per cent (depends on the stock exchange environment). It is calculated per each investment individually.

Advantages Enjoyed by Those Investing with United Traders

RELIABILITY

Our risk managers ensure proper support throughout the entire transaction.

IN THE PROFIT FROM THE FIRST DAY

Such an approach allows it to limit extra risks related to bankruptcy of start-ups and considerably increase profit vs investors purchasing shares on open Market.

LOW ENTRY THRESHOLD

Millions of dollars are required to buy shares on a subscription basis. We have generated a pool of traders and investors which enables any newbie to participate in any transaction as aforesaid by investing just USD50 or more.

Invest in IPO Upstart Holdings

This investment idea is no longer available. New applications are not accepted

View more ideas