Calling out The B.S.! And Pounding the Table on Upstart as the Shorts Cry Wolf
My Opinion! Short-sellers are in full panic mode ahead of Upstart’s earnings – and I’m here pounding the table (literally), calling their B.S.
The Short Attack: Convenient Timing, Shaky Claims
In the past week, a dramatic short report and even a sniffing “investigation” by a law firm conveniently materialized right before Upstart’s earnings. How convenient. When nearly 30% of your float is sold short, you can bet the short camp will throw everything (including the kitchen sink) at the stock to scare off weak hands. The latest allegations of “breached fiduciary duty” by Upstart’s management reek of desperation more than substance. It’s a classic tactic: sow doubt, drop the share price, and hopefully cover their shorts on the cheap before the truth outs. Well, I’m not biting – and neither are the fundamentals.
Fundamentals Don’t Lie: Blowout Quarter and AI Edge
While the short crowd spins its narrative, Upstart’s actual performance tells a different story. Last quarter’s earnings were a smackdown: Q2 revenue came in at $257 million (up 102% year-on-year) and the company even notched its first GAAP net profit since 2022. They originated $2.8 billion in loans during Q2 (a 159% YoY surge) – not exactly the profile of a dying lending business. Those aren’t numbers from a company in trouble; they’re the numbers of a growth story back in high gear.
And what about those supposed credit problems the shorts keep whispering about? Check the math: Upstart’s AI-driven underwriting is actually reducing defaults. In fact, year-over-year delinquency rates dropped ~20–32% as of Q2 – yes, defaults went down, not up. The platform’s AI models assess far more data points than old-school lenders do, and it shows: default rates on Upstart-powered personal loans are roughly 75% lower than industry averages for similar borrowers. That’s not hype – that’s math. So the next time a short seller blog screams “rising defaults!”, remember that Upstart’s real-world loan performance is actually improving. The company’s tech is working as intended (approving more borrowers while keeping losses in check), which is exactly why I’m banging on this Hertz-colored desk in the first place.
Rate Relief on the Horizon – a Tailwind for UPST
Here’s another inconvenient fact for the bears: the macro winds are shifting in Upstart’s favor. After a year of high interest rates putting a damper on lending, relief finally arrived in late 2024 – the Fed began cutting rates, and guess what happened? Upstart’s business took off. The dip in rates at the end of 2024 was a big tailwind for Upstart’s loan volumes, and Wall Street expects more easing ahead. Lower rates mean cheaper loans and a bigger pool of borrowers, which is rocket fuel for an AI-driven lender that thrives on volume. In other words, as borrowing costs fall, Upstart’s addressable market grows. You can almost hear the collective groan from the short sellers – the last thing they want is a macro environment that supercharges Upstart’s growth. (To be fair, if the Fed drags its feet on rate cuts, Upstart’s momentum could pause. But with inflation cooling and economic growth steady, the bias is toward easing – and Upstart is ready to pounce.)
High Risk, High Conviction – Pounding the Table into Earnings
Make no mistake: Upstart isn’t a “safe” stock by any conservative measure. It’s volatile, it’s heavily shorted, and it only recently clawed back to profitability. I acknowledge the risk – if something truly is rotten at the company or if the economy flips upside down, my table-pounding conviction will land me on the wrong side of a meme. But looking at the evidence, I see a disconnect between perception and reality. The broader credit environment is far from a meltdown – banks’ latest earnings show credit quality is stable to improving, unemployment is low, and consumers are still spending (this isn’t 2008 all over again, despite the doomsayers). In my opinion, the negative press around Upstart right now is being driven more by short-term tactics than any genuine corporate malfeasance. Breach of fiduciary duty? Please. The only
breach here is the breach of common sense in taking these short-seller theatrics at face value.
I’m pounding the table on UPST going into earnings because I believe the shorts are about to get crushed. Could I be wrong? Sure, that’s the nature of high-risk, high-reward investing – either you win big or you end up with egg on your face. But given Upstart’s surging growth, improving loan performance, and an incoming tailwind from lower rates, I like my odds. In fact, I’ll go one step further: I suspect a lot of those short players will be scrambling for the exits once real numbers hit the tape and blow up their flimsy narrative.
See you at $100 — or on the meme wall of sham
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