Tag: Mightve

Why Upstart Might’ve Reached Its Peak, For Now
Upstart Holdings’ stock has enjoyed a scintillating run in its past six months, surging by approximately 260%. However, despite its astounding form, the sustainability of Upstart’s latest surge can be contested by talks of re-inflation, a potential shift in credit risk, and Upstart’s ongoing profitability concerns.

Aside from the above-mentioned, JP Morgan recently downgraded Upstart to ‘underweight’ on the basis of an unjustified valuation. According to JP Morgan, Upstart’s “shares seem to be priced to perfection,” adding substance to a revision of the stock’s prospects.

The headwinds mentioned within the introduction provide a summary; let’s traverse into a more comprehensive discussion of Upstart’s emerging headwinds.

Critiquing Upstart requires an understanding of its business model. For those unaware, Upstart is a lending marketplace that leverages artificial intelligence to curate comprehensive borrower credit scores. The company passes its data analytics to banks, who ultimately write consumer loans.

Why Upstart Might’ve Reached Its Peak, For Now

Source: Upstart

Upstart’s business model has delivered tangible success as the company’s loan approval rate outpaces that of traditional banks while also reducing the borrower’s repayment rate. Moreover, Upstart has successfully implemented a complex model, where it bases its scenario analysis on over 1,600 variables and 77 million repayment events, illustrating the company’s successful use of big data analytics to curate justified credit scores.

Another compelling feature of Upstart is its ‘skin in the game,’ whereby the company holds its very own loan portfolio, showing its commitment to its methodology. As illustrated in the following diagram, Upstart recorded approximately $334 million in co-investments during its latest quarter, a substantial increase from $66 million a year prior.

Why Upstart Might’ve Reached Its Peak, For Now

Source: Upstart

Upstart’s identifiable key drivers are both internal and external.

Firstly, as previously mentioned, the company utilizes a comprehensive screening methodology whereby it leverages artificial intelligence to optimize large data sets. Moreover, its machine learning techniques incorporate non-linear relationships, allowing Upstart to generate a wider breadth of scenarios than traditional economic models otherwise would.

Upstart’s digitalization has evidently resulted in a cutting-edge marketplace. However, the company’s internal drivers are influenced by external factors such as interest rates, inflation, credit risk, and related variables. Therefore, a secondary driver for Upstart is the overall health of the lending environment.

Cumulatively, Upstart’s key drivers have contributed to its cyclical performance, displayed by the fact that the stock remains nearly $300 below the heights it achieved in 2021 when it reached the $380 handle.

An observation of Upstart’s stock price shows its correlation to interest rates. For example, the stock regressed since 2022’s rate hike cycle started, yet recovered when certainty of an interest rate pivot occurred earlier this year.

Why Upstart Might’ve Reached Its Peak, For Now

Source: Yahoo Finance

The main reason for Upstart’s sensitivity to interest rates derives from its dependency on loan volumes. The company’s marketplace platform relies on fee-based earning and, therefore, acts counter-cyclically to interest rate levels.

Lower interest rates visibly spiked Upstart’s stock price since mid-year. However, disinflation has slowed, reducing the capacity for interest rate cuts. In fact, factors such as President Trump’s proposed tariffs, China’s stimulus, enhanced consumer sentiment, Middle Eastern tensions’ influence on oil prices, and enhanced industrial production might contribute to an argument for a 2025 re-inflation scenario.

Why Upstart Might’ve Reached Its Peak, For Now

Source: Trading Economics

Whether effective rates decline in the coming quarters remains to be seen. Nonetheless, key variables suggest that investors might’ve overestimated the velocity of future disinflation, which, in turn, caused Upstart’s stock to surge beyond its fair value.

This sub-section’s title refers to the fact that Upstart’s advanced data analysis likely won’t defend against severe macroeconomic headwinds. The company’s methodology might produce relative value. However, a rapid rise in credit risk will ultimately reduce lenders’ willingness to write high-risk loans.

Credit spreads remain tight, suggesting the U.S. credit market is healthy. However, spreads are cyclical and mean-reverting; therefore, widening will likely occur at some stage. Upstart’s marketplace and loan book has flourished in 2024’s low-spread environment. Nevertheless, as mentioned, widening may disrupt its flow.

Why Upstart Might’ve Reached Its Peak, For Now

Source: St. Louis Federal Reserve

The question now becomes, what may cause spreads to widen again? A key driving factor could be consumer loan delinquencies. Delinquencies remain elevated, and lower U.S. interest rates haven’t decreased delinquencies by a material level. Thus, an argument exists that the real economy’s credit risk might be underpriced by spreads, causing investors to ramp up Upstart’s stock in recent months.

Why Upstart Might’ve Reached Its Peak, For Now

Source: St. Louis Federal Reserve

As with interest rates, 2025’s credit risk outlook is up for discussion. However, a decaying credit environment would likely dent Upstart’s loan origination volumes through lower conviction from banks and other lenders. Moreover, a secondary impact can occur as the company has consumer debt on its own balance sheet, with auto loans spanning most of Upstart’s loan book.

Why Upstart Might’ve Reached Its Peak, For Now

Source: Upstart

Upstart’s business has scaled since its inception yet struggled to achieve profitability. Although running at a loss is normal for growth-stage firms, the nature of Upstart’s expenses conveys how expensive it is to expand its business model.

The following figure shows Upstart’s comprehensive income statement; a discussion follows.

Why Upstart Might’ve Reached Its Peak, For Now

Source: Upstart

A telling feature of the company’s income statement is its engineering and product development line item, which spans approximately 32% of the company’s operating costs. While innovation is key, engineering costs can be persistent as top talent usually costs a premium. Upstart’s competitive advantage is product-driven; therefore, retaining top-tier engineering capabilities will be vital in the years ahead.

Furthermore, Upstart’s sales and marketing expenses comprise about 20% of the company’s expense base, while general and administrative expenses span roughly 29%. These costs are more straightforward to dilute than engineering expenses, especially if broad-based inflation stabilizes; however, a competitive environment poses challenges, likely forcing Upstart to inflate its marketing budget.

In effect, Upstart has a scalable business model. However, the competitive environment and Upstart’s product-centric approach mean Upstart’s top-line success is expensive to ascertain.

As pointed out earlier, JP Morgan is concerned about Upstart’s valuation outlook. Key metrics agree with the investment bank’s consensus. For example, Upstart’s price-to-sales ratio has nearly doubled since last year. Moreover, the company’s price-to-book ratio has surged to 11.78x from roughly 5.55x a year ago, while its price-to-free cash flow ratio is arguably outlying at 86.87x.

Why Upstart Might’ve Reached Its Peak, For Now

Source: Macro Trends

An isolated view of the Upstart’s price multiples accompanies the thesis’ fundamental argument. It is unlikely that Upstart’s fundamental growth will sustain its current multiples, especially if investors decide to ‘take profit.’

Lastly, Upstart had a 14-day relative strength index of 66 at the time of writing the article. For those unaware, an RSI of 70 and above suggests a stock is technically overbought. Therefore, Upstart’s RSI will likely cause concern in light of its elevated fundamental price multiples.

Upstart Holdings is a growing company with a highly compelling business model emphasizing a product-driven approach. However, history has proven that Upstart’s stock is cyclical, and key identifiers suggest that Upstart stock’s latest form might come to a halt in 2025.

While some might disagree with the fundamental argument, Upstart’s valuation multiples and technical features are hard to pass, even in a bull market.

Upstart’s stock seems overcooked for the time being.

This article first appeared on GuruFocus.

Upstart has been gaining a lot of attention in the fintech world recently, with its innovative approach to lending and use of artificial intelligence to assess creditworthiness. However, there are some signs that the company may have reached its peak, at least for the time being.

One reason for this is the increasing competition in the fintech space. Upstart’s success has attracted a number of new players to the market, all vying for a piece of the pie. This increased competition could make it harder for Upstart to continue growing at the same rapid pace it has been.

Another factor to consider is the overall economic climate. With interest rates rising and the possibility of an economic downturn looming, consumers may become more cautious about taking on new debt. This could impact Upstart’s loan volumes and profitability.

Additionally, there have been some concerns raised about Upstart’s business model. Critics have questioned the accuracy of the company’s AI-driven credit assessments and raised concerns about potential bias in the algorithms. These issues could lead to regulatory scrutiny and damage Upstart’s reputation.

While Upstart has been a standout in the fintech world, it’s important to consider these potential challenges and monitor how the company navigates them in the coming months. It’s possible that Upstart will continue to thrive, but it’s also worth being cautious about its future prospects.

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December 31, 2024
10 Hidden Horror Gems You Might’ve Missed
It was another bustling, not to mention fruitful, year for horror. And because the amount of new horror releases is staggering, especially when looking beyond the popular and commercial side, it is very understandable if a lot of titles flew under radars.

So, like previous years, the objective of this end-of-year list is to bring attention to just ten of those overlooked, underrated, and less-known newer horrors that can be considered hidden gems of 2024.

Dead Teenagers

Pictured: Jordan Myers and Chris Hahn in Dead Teenagers.

Quinn Armstrong, who gave us the dark comedy Survival Skills, is behind the Fresh Hell Presents trilogy. This set of self-contained horrors began with the conversion therapy haunter The Exorcism of Saint Patrick, then tackled neo-Nazis and werewolves in Wolves Against the World. The final installment, Dead Teenagers, sounds the most conventional of the batch; young friends are picked off by a mysterious killer. Soon enough, though, the plot takes a significant turn.

Indeed, Dead Teenagers offers more meta-horror, but before eyes start to roll, Armstrong breathes some badly needed new life into this particular genre space that hit max occupancy years ago. Does everything work here? No, not quite; the last act hits a snag or two. Even so, the ambition here is more successful than not.

#MissingCouple

Pictured: A shadowy entity watches someone sleeping in #MissingCouple.

Jacques Edeline and Oliver Mauldin‘s #MissingCouple starts off with Austin Jenkins and Janna Jenkins‘ characters giving up their “vanlife” to restore an old and isolated farmhouse in rural Mississippi. Immediately the found-footage movie then reveals the two have since disappeared, and a friend and fellow vlogger is now searching for them. His efforts are finally rewarded with terror as he also becomes stalked by a threatening presence on the farm.

As a marketing stunt, the people behind #MissingCouple tried to convince the internet that Austin and Janna, a real couple, had disappeared. Of course, most everyone is too cynical to believe that sort of ploy nowadays. Be that as it may, the movie has its tense moments and is even a tad cunning in how the story is framed.

Dead Whisper

Pictured: Samuel Dunning in Dead Whisper.

Your enjoyment of Conor Soucy‘s bleakly shot debut feature Dead Whisper will depend on how you feel about slow burns and abstract dread. This nightmarish tale of grief doesn’t yield easy thrills or answers, however, it does hit the spot for ambient unease and cerebral visuals.

A workable comparison for Dead Whisper is BBC’s A Ghost Story for Christmas. By that I mean this movie is more conceptual and gloomy than straightforward, but Soucy admirably commits to style, even if that dedication sometimes comes at the expense of coherency.

Die Alone

Pictured: Carrie-Anne Moss and Douglas Smith in Die Alone.

On the surface, Lowell Dean‘s Die Alone looks to be another rehash of recent post-apocalyptic horrors; here Carrie-Anne Moss fights off plant-based, human-zombie hybrids in the aftermath of a global catastrophe. However, there is more to her character than first let on, and much like A Quiet Place: Day One, this movie zooms in on the emotional element of survival rather than just the action.

When it seems like Die Alone is pinching too many tropes from its contemporaries, a startling turn in the story smooths everything out, including the rough edges.

Birder

Pictured: Michael Emery in Birder.

While Birder is billed as an erotic thriller, it has enough grisly parts to satisfy more permissive horror fans. Michael Emery provides Nate Dushku‘s feature debut a captivating lead performance; he plays the murderous culture-chameleon who infiltrates a close group of queer nudists.

The killer’s identity is known from the very start, so whodunit and slasher fans should readjust their expectations or simply look elsewhere. That being said, Dushku doesn’t take the killing aspect lightly, seeing as Emery’s character is as brutal as he is alluring. If you’re seeking a movie like Stranger by the Lake except with a higher body count, then keep an eye out for Birder.

Slay

Pictured: The cast of Slay.

This darling and scrappy Tubi Original, one directed by Jem Garrard, is a pleasure from start to finish. Combining drag culture with humor and vampires sounds chancy at first, but any wariness quickly fades once the fangs comes out. It’s a riot watching these queens duke it out with barflies-turned-bloodsuckers.

As per Bloody Disgusting’s beaming spotlight on Slay: “Real care has been taken in every aspect, from script to filming. The characters feel like real people, and the performances are honest, pulsating with immense heart.” High but warranted praise.

Abruptio

Pictured: The character Les Hackel in Abruptio.

Anyone with concerns about Abruptio turning out to be a plotless puppet comedy can rest easy, because Evan Marlowe‘s movie is no feature-long gimmick. The life-sized puppetry is both impressive and unsettling, but once past all that, there is an intriguing story about a man (voiced by James Marsters) who obeys a series of escalating demands, or else the bomb implanted in his neck will explode. That’s only the beginning, seeing as there is a larger force at work behind the curtain.

Abruptio is a must-see mix of horror, noir and science fiction. The artistry of this production, which has been in the works since 2015, is a sight to behold. And the talent is stacked as well; the voice cast includes Jordan Peele, Robert Englund, Sid Haig, Christopher McDonald and Hana Mae Lee. There’s really nothing like this movie in the horror genre right now.

Year 10

Pictured: Toby Goodger in Year 10.

Benjamin Goodger‘s Year 10 takes the be-silent-or-die approach of A Quiet Place and Azrael to the next logical step by having zero spoken dialogue. Absolutely none. In this new cinematic case of global catastrophe, the world has come to near stillness thanks to an unknown cause, and the survivors have turned to cannibalism after “the living ate the dead.” As if that’s not bad enough, there are also feral Irish wolfhounds running around in packs.

Year 10 stars the director’s brother, Toby Goodger, who normally would be working behind the camera. In this scenic and harrowing genre mashup, though, the lead — whose fallible character seeks medicine for his sick loved one and vengeance for his slain father — delivers an unassuming performance. Ultimately, the technical merits of the movie win out when the basic concept feels worn out.

All You Need Is Death

Pictured: Olwen Fouéré in All You Need is Death.

For something quite unlike anything else coming out in the current horror scene, Paul Duane‘s All You Need is Death is the kind of folk-horror movie that actually feels like it’s casting a spell on its viewers. Specific yet ambiguous, the Irish director’s feature debut is so hauntingly told and grimly shot that it’s almost begging you not to watch.

On top of a novel concept and the generally eldritch quality, All You Need Is Death also boasts a terrific cast; the characters engage with the story’s strangeness so believably here. All around, just a unique movie.

Lowlifes

Pictured: Amanda Fix in Lowlifes.

Earlier in the year, Tesh Guttikonda and Mitch Oliver‘s Lowlifes dropped on Tubi without any big hype or coverage, but over time, it has developed a sizable following. Maybe one that defies its hidden gem status? Nevertheless, the movie is deserving of its kudos. Good word of mouth has done wonders to raise this indie horror’s profile.

While it’s best to go into Lowlifes with a blank slate, just know this clever meeting of colorful characters, wit, and violence is truly one of the best horror surprises of 2024.
1. The Invitation (2015) – A tense and unsettling thriller about a dinner party that takes a dark turn.
2. The House of the Devil (2009) – A slow-burn horror film that pays homage to 80s classics.
3. The Devil’s Candy (2015) – A chilling and intense film about a family who moves into a house with a dark past.
4. The Autopsy of Jane Doe (2016) – A creepy and atmospheric horror film centered around an unsettling autopsy.
5. The Blackcoat’s Daughter (2015) – A haunting and atmospheric film about two girls left alone at their boarding school during winter break.
6. The Loved Ones (2009) – A twisted and disturbing Australian horror film about a prom night gone horribly wrong.
7. Creep (2014) – A found footage horror film that will leave you feeling uneasy and on edge.
8. The Wailing (2016) – A Korean horror film that delves into the supernatural and the horrors of possession.
9. We Are Still Here (2015) – A supernatural horror film set in a secluded New England town with a dark history.
10. The Ritual (2017) – A horror film about a group of friends who encounter something sinister in the Swedish wilderness.
Tags:
1. Hidden horror gems
2. Horror movies
3. Underrated horror films
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5. Top 10 horror films
6. Horror movie recommendations
7. Horror movie list
8. Obscure horror films
9. Overlooked horror movies
10. Hidden horror movie gems
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December 28, 2024