BUZZ - Upstart Crashed Due To 3 Misdiagnoses - Strong Buy

• Upstart was savaged (+50%) after their Q1 earnings call, falling disproportionately relative to a moderation in revenue growth and a  contraction in profit margins forecast for the rest of 2022.
• The Market's stern response can be attributed to three main factors: first, Upstart's ‘new’ policy of retaining loans on the company's own balance sheet.
• Second, more ominous, a question mark on the efficacy of Upstart's Machine-Learning model to predict the creditworthiness of borrowers in the now-prevalent regime of rising rates for loans.
• Third, a double whammy from the headwind of rising rates, due to a decline in Upstart’s forecast growth rate and a derating in valuation multiples of growth stocks.
• This article shows reasons one and two are misdiagnoses, pure and simple; the third is valid, but the quantum of Upstart's derating results in a "Strong Buy," despite rising rates.

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