Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>We believe that Upstart's share price has been excessively oversold since October 2021. Since its highs in October 2021, Upstart's share price has declined significantly by nearly 72%.</li>
<li>The combination of buying back shares, more attractive valuations, and a much stronger sales growth than its peers is likely to result in Upstart outperforming the market this year.</li>
<li>Our base case valuation of Upstart is implied market cap of $13.8 billion and target price of $165 per share, which is 47% higher than current share price.</li>
</ul>


We believe that Upstart's share price has been excessively oversold since October 2021. Since its highs in October 2021, Upstart's share price has declined significantly by nearly 72%.
The combination of buying back shares, more attractive valuations, and a much stronger sales growth than its peers is likely to result in Upstart outperforming the market this year.
Our base case valuation of Upstart is implied market cap of $13.8 billion and target price of $165 per share, which is 47% higher than current share price.


Upstart Holdings: Focus on the Share Buyback & Outstanding Growth of AI Driven Lending Platform

Equity Capital Markets

Upstart Holdings  / Equity Capital Markets

<p>Our base case valuation of Upstart Holdings is EV of $3,153 million, implied market cap of $3,236 million, and implied price of $35.8 per share, which would be 63% higher than the high end of the IPO price range of $22. Given the attractive upside, we have a positive view of the Upstart IPO. Our base case valuation uses our estimated sales of $321 million in 2021 and a 9.8x EV/S multiple. The 9.8x EV/S multiple was derived from the average of the comps' 2021 EV/Sales average and median multiples. </p><p>Upstart's core business uses the cloud-based artificial intelligence lending platform and aims to provide lower interest rates, higher approval rates, and a smoother digital experience. Since the company's inception, its bank partners have originated more than 0.62 million personal loans that have generated over 9 million repayments. As of the end of September 2020, about 70% of the Upstart-powered loans were entirely automated. </p>

Our base case valuation of Upstart Holdings is EV of $3,153 million, implied market cap of $3,236 million, and implied price of $35.8 per share, which would be 63% higher than the high end of the IPO price range of $22. Given the attractive upside, we have a positive view of the Upstart IPO. Our base case valuation uses our estimated sales of $321 million in 2021 and a 9.8x EV/S multiple. The 9.8x EV/S multiple was derived from the average of the comps' 2021 EV/Sales average and median multiples. Upstart's core business uses the cloud-based artificial intelligence lending platform and aims to provide lower interest rates, higher approval rates, and a smoother digital experience. Since the company's inception, its bank partners have originated more than 0.62 million personal loans that have generated over 9 million repayments. As of the end of September 2020, about 70% of the Upstart-powered loans were entirely automated. 

United States

Nelnet, Inc. is a consumer finance company that provides products and services to participants in the education finance process.  The Company originates, holds, and services education loans and offers a broad range of financial services and technology-based products, including student loan origination and lending, student loan, and guarantee services.

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Nelnet Inc Cl A (NNI US)

Upstart IPO Valuation Analysis

Our base case valuation of Upstart Holdings is implied market cap of $3,236 million and implied price of $35.8 per share, which would be 63% higher...

Douglas Kim

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Upstart Holdings: Focus on the Share Buyback & Outstanding Growth of AI Driven Lending Platform

The combination of buying back shares, more attractive valuations, and a much stronger sales growth than its peers is likely to result in Upstart...

Douglas Kim

Upstart IPO Valuation Analysis

Our base case valuation of Upstart Holdings is implied market cap of $3,236 million and implied price of $35.8 per share, which would be 63% higher...

Douglas Kim