Short-seller Bleecker Street sees ‘many looming issues’ at Upstart

Bleecker Street Research announced a short position in Upstart, where the firm sees “many looming issues.” The purchasers of Upstart credit are “facing severe regulatory issues, and we believe its largest source of revenue could be shut down by the FDIC in the next twelve months,” the firm tells investors in a report published on its site. Upstart has “publicly claimed that its AI platform enables it to make superior credit decisions,” but Bleecker believes “this is not true and that the substance behind much of its hype is very flimsy,” the firm added. “We believe Upstart is a cost-of-capital company at best long-term. It has no marketing advantage, no production advantage, and no distribution advantage, in our view. This should call for this to trade at no more than 1-2x its $7 per share of tangible equity in a normal equity markets environment and it could very well trade at a large discount if and when capital markets run into liquidity challenges,” the firm concluded.