No. of Recommendations: 1
It's so easy for me to fall into the trap of price anchoring with Upstart. They've
certainly run the gamut with price so I find there's a shocking number of places to anchor!...
Have you given any more thought about targets where you would sell and what your reasoning
is for those targets? What is crazy high for you? Would love to hear your thoughts.
Hi Ears, I wanted to get back to you, though I don't have anything substantive to report. I agree with you about the anchoring. I know it's a problem for me and for most investors.
R.e. valuation, when I bought it the first time, in the $70s, it had come down in price a huge amount from it's peak. I looked at the company and saw real earnings and what looked like a tremendous growth opportunity, I pulled the trigger when it was about PE 50, believing that they could grow into that valuation and more within 5-10 years. Now, of course, UPST has a long way to go to get back to diluted earnings of $1.43 per share, and certainly the business environment has changed a huge amount with interest rates and the fountain of free money from the US government stopping.
We're getting back close to my original purchase point, and I still believe in the thesis under which that I bought the stock, though the business has been through a very rough patch I also see them continuing to execute in important ways, i.e. auto loans.
So ... I need to work on clarifying my thinking on potentially selling, but if the Gamestop/Robinhood bunch decided to punk the short sellers and we quadrupled from here in 2023, revisiting the prior heights, as a wild hypothetical, I feel like I should be selling and rebuying lower. It's hard to imagine the business results in the next few years that would allow the business to catch up to such valuation.
