Going through S1 information -- stumbled across what I believe to be another IPO that's going to blow up -- $UPST

Let me just go through a few things that I think make this another ripe candidate to explode higher.

Upstart is another AI powered company. However they have a very narrow focus -- lending. However lending makes for a huge TAM. Think credit cards, auto loans, business loans, mortgages, equity lines of credit. The TAM for AI based lending is enormous. Think trillions.

However it's not just what they do that caught my eye...it's who they are. When you think of AI, one company that immediately comes to mind is Google.

This company has 3 cofounders and two of them came from Google

Dave Girouard was president of Google Enterprise
Anna Counselman was with Google Consumer Operations

and the third cofounder

Paul Gu, previously worked in risk analysis at DE Shaw Group.

It's a smart, young and highly accomplished group.

AI truly is a great fit for lending and finance in general. Financial models are built off risk analysis which are entirely quantitative. Thus a good risk model creates a flywheel like effect in 2 ways. Model Accuracy and Borrower Selection.

This is a company that is also growing and growing fast. Prior to the pandemic loan growth was accelerating. Understandably it has slowed down some. Because this is a quick overview I'm unable to give detail as I haven't dug into this yet.

Another thing to like....the rare Fintech IPO that is not burning up cash!!!

The valuation on this company is as following:
72.4M shares outstanding after the offering at proposed max price of $22 = 1.6B valuation

Accounting for the 20.7M shares which will dilute at $4 WAC, you will have 22% dilution on the initial buy in.

TTM revenues are 209M, so you're looking at about an 8x P/S ratio. Not bad for a fintech.

But look at the COVID effect based on the June Quarter!

Obviously the effects of COVID19 on a lending company can't be overstated, especially since the algo's $UPST use haven't been applied in an economy like this before. However it can also be argued that the effects of COVID19 shows why this tech is so valuable...

The disaster fiscal response has widened inequality by making credit available mostly to large public companies who had their bonds backstopped by the fed...the reasoning was the trickle down economy...

The fed doesn't have the resources to vet and approve every small business loan. So they give big money to big companies and assume that money will go into the economy and eventually support SMB...

Of course that's not what happens. The money goes to the stock market and the rich get richer and the poor get relatively poorer.

This is where AI can really help. By automating loan decisions, government entities and banks can do more with less people.

Theoretically they can focus on smaller businesses and let public companies use the public market.

Theoretically.

Seeing the increase in fully automated loans means theoretically this tech could be priceless in the next big financial crash.

One last thought I'll leave you with. This company was founded less than 10 years ago. It did it's first loan in 2014. <7 years later it's doing nearly 8B in loans!

Having said all that I have not read over the risks involved in this offering, nor do I know much about the company. This is a high level look at their S1. However on the surface, I'd pay up for them. Even if the stock launches at 2B MC I'd have to think about it.

Unless of course something shows in the risks that raises some red flags.

If you like this thread...retweet it...but maybe after 12/16 so we can keep the hype down?