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 Analyst, Investi Analyst

Investi Analyst

Equity Analyst

Investment Entrepreneur / Equity Analyst.

<ul>
<li>Upstart is down 73% from its all-time highs after delivering a robust earnings report that saw revenue grow over 200%.</li>
<li>There are 5 key factors that will likely continue to drag down the stock as the Nasdaq continues its downtrend.</li>
<li>The big question for investors is to rigorously evaluate if Upstart is providing investors with excellent value right now for a company that is growing over 200% and highly profitable</li>
</ul>


Upstart is down 73% from its all-time highs after delivering a robust earnings report that saw revenue grow over 200%.
There are 5 key factors that will likely continue to drag down the stock as the Nasdaq continues its downtrend.
The big question for investors is to rigorously evaluate if Upstart is providing investors with excellent value right now for a company that is growing over 200% and highly profitable


Upstart: 73% Down - Here Are 5 Factors Driving The Stock Down

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

<p><a href="https://www.smartkarma.com/entities/moneylion-inc" target="_blank" data-smartkarma-citation="entities:34686:1" rel="noopener">MoneyLion (ML US)</a> , one of the fastest growing fintech companies, went public via SPAC in February and shares were listed on the NYSE in September. The company merged with SPAC Fusion Acquisition at combined enterprise value of ~$2.4 billion, PIPE investors acquired 25 million Class A shares for $10.00 per share and private placement was closed prior to close of business combination. Therefore, MoneyLion has raised $250 million from investors such as BlackRock and private equity firm Apollo Global Management. Citibank, Broadhaven and FT Partners served as financial advisors to MoneyLion while J.P. Morgan Securities acted as financial advisor to Fusion.</p>

MoneyLion (ML US) , one of the fastest growing fintech companies, went public via SPAC in February and shares were listed on the NYSE in September. The company merged with SPAC Fusion Acquisition at combined enterprise value of ~$2.4 billion, PIPE investors acquired 25 million Class A shares for $10.00 per share and private placement was closed prior to close of business combination. Therefore, MoneyLion has raised $250 million from investors such as BlackRock and private equity firm Apollo Global Management. Citibank, Broadhaven and FT Partners served as financial advisors to MoneyLion while J.P. Morgan Securities acted as financial advisor to Fusion.

MoneyLion: The Downside Looks Limited and Valuations Remain Attractive

<header id="article-header_2-0"><p data-tooltip="Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder." data-inline-tooltip="true" data-tooltip-position-x="left" data-tooltip-position-y="top">Founded in 2013, <a href="https://www.smartkarma.com/entities/moneylion-inc" target="_blank" data-smartkarma-citation="entities:34686:1" rel="noopener">MoneyLion (ML US)</a> is a fintech company that provides lending, mobile banking, cash advances, financial advisory, and investment services including crypto trading to its users. The company aims to empower mobile banking and other financial products through machine learning and artificial intelligence technologies. Since its launch in 2013, MoneyLion has engaged with nearly 8.7 million users. </p></header><p data-tooltip="Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder." data-inline-tooltip="true" data-tooltip-position-x="left" data-tooltip-position-y="top">In February 2021,<a href="https://www.reuters.com/technology/mobile-bank-moneylion-go-public-via-blank-check-merger-29-bln-deal-2021-02-12/" target="_blank" rel="noopener"> MoneyLion</a> agreed to go public through a merger with a blank-check firm Fusion Acquisition Corp <a href="https://www.reuters.com/companies/FUSE.N" target="_blank" rel="noopener">(FUSE.N)</a>, that would value the equity of the combined company at $2.9 billion. As of 26 October 2021, MoneyLion's market cap is $1.4 billion. MoneyLion completed its public listing on the NYSE in September 2021.</p><div class="content-highlight">
<h2>Valuation</h2>
<p>Our base case valuation of MoneyLion over the next year is $9.5 per share, which would be 59% higher than current share price. Our base case valuation is based on EV/S of 7.5x using our estimated sales of $257 million in 2022. We took a 10% discount to the company's guidance sales in 2022 to be more conservative. </p>
<p>The EV/S multiple of 7.5x is about 50% discount to the average EV/S multiple of its peers, which is mainly due to its lower operating margins and size effect. However, if the company is able to generate higher sales growth and more sizeable improvement to operating margins than its peers in the next several quarters, this valuation discount is likely to decline considerably. </p>
<p>Unlike in 2H 2020 to 1Q 2021 when there was a much positive sentiment on SPACs and SPAC related mergers, this sentiment has worsened considerably in the past six months. This is probably one of the reasons why the stock has taken such a beating since going public in the past month. We would argue that the fundamentals of the company is improving and the financial metrics of MoneyLion remain solid. Therefore, we would be a Buyer of <a href="https://www.smartkarma.com/entities/moneylion-inc" target="_blank" data-smartkarma-citation="entities:34686:1" rel="noopener">MoneyLion (ML US)</a> shares at current depressed levels.</p>
</div>

Founded in 2013, MoneyLion (ML US) is a fintech company that provides lending, mobile banking, cash advances, financial advisory, and investment services including crypto trading to its users. The company aims to empower mobile banking and other financial products through machine learning and artificial intelligence technologies. Since its launch in 2013, MoneyLion has engaged with nearly 8.7 million users. In February 2021, MoneyLion agreed to go public through a merger with a blank-check firm Fusion Acquisition Corp (FUSE.N), that would value the equity of the combined company at $2.9 billion. As of 26 October 2021, MoneyLion's market cap is $1.4 billion. MoneyLion completed its public listing on the NYSE in September 2021.
Valuation
Our base case valuation of MoneyLion over the next year is $9.5 per share, which would be 59% higher than current share price. Our base case valuation is based on EV/S of 7.5x using our estimated sales of $257 million in 2022. We took a 10% discount to the company's guidance sales in 2022 to be more conservative. 
The EV/S multiple of 7.5x is about 50% discount to the average EV/S multiple of its peers, which is mainly due to its lower operating margins and size effect. However, if the company is able to generate higher sales growth and more sizeable improvement to operating margins than its peers in the next several quarters, this valuation discount is likely to decline considerably. 
Unlike in 2H 2020 to 1Q 2021 when there was a much positive sentiment on SPACs and SPAC related mergers, this sentiment has worsened considerably in the past six months. This is probably one of the reasons why the stock has taken such a beating since going public in the past month. We would argue that the fundamentals of the company is improving and the financial metrics of MoneyLion remain solid. Therefore, we would be a Buyer of MoneyLion (ML US) shares at current depressed levels.


MoneyLion - An Oversold Fintech Stock Following a SPAC Merger

Equity Capital Markets

<p>In this insight, we provide an updated valuation analysis of <a href="https://www.smartkarma.com/entities/kakao-pay-corp" target="_blank" data-smartkarma-citation="entities:29675:1" rel="noopener">Kakao Pay (377300 KS)</a>. We update our financials to account for the company's 1H 2021 results. In addition, we have used the updated financials comparisons of the comps.</p><div class="content-highlight"><p>Our base case valuation of Kakao Pay is an implied market cap of 11.1 trillion won or 81,829 won per share. Our base case valuation of the company is reduced by 9% mainly due to lower sales estimates in 2022 combined with lower valuation multiple (EV/S of 10x in 2022 versus 10.6x previously). </p><ul style="list-style-type: disc;"><li>Our base case valuation is based on 10.0x EV/Sales multiple and applying this to our estimated sales of 919 billion won in 2022. </li><li>The EV/S multiple of 10.0x is based on the median valuation multiple of the comps in 2022. Among the comps, the valuation multiple of Upstart Holdings has increased materially in the past two months, which was offset by lower valuation multiples of 360 Digitech and Lemonade.</li></ul><p>The IPO price range is from 60,000 won to 90,000 won. If the IPO is priced near the mid to high end of the IPO price range, we would avoid this deal. On the other hand, if the IPO is priced close to the low end of the IPO price range, we would be more comfortable with taking the deal.</p><p><strong>Furthermore, although our one year base case valuation is 8</strong><strong>1,829 won per share, we do think there could be moderate (but not excessive) pop in the first 1-2 days of trading rising to as high as 103,366 won per share. We believe that many investors may opt to take some profits if the stock pops to more than 100,000 won per share. </strong></p></div>

In this insight, we provide an updated valuation analysis of Kakao Pay (377300 KS). We update our financials to account for the company's 1H 2021 results. In addition, we have used the updated financials comparisons of the comps.Our base case valuation of Kakao Pay is an implied market cap of 11.1 trillion won or 81,829 won per share. Our base case valuation of the company is reduced by 9% mainly due to lower sales estimates in 2022 combined with lower valuation multiple (EV/S of 10x in 2022 versus 10.6x previously). Our base case valuation is based on 10.0x EV/Sales multiple and applying this to our estimated sales of 919 billion won in 2022. The EV/S multiple of 10.0x is based on the median valuation multiple of the comps in 2022. Among the comps, the valuation multiple of Upstart Holdings has increased materially in the past two months, which was offset by lower valuation multiples of 360 Digitech and Lemonade.The IPO price range is from 60,000 won to 90,000 won. If the IPO is priced near the mid to high end of the IPO price range, we would avoid this deal. On the other hand, if the IPO is priced close to the low end of the IPO price range, we would be more comfortable with taking the deal.Furthermore, although our one year base case valuation is 81,829 won per share, we do think there could be moderate (but not excessive) pop in the first 1-2 days of trading rising to as high as 103,366 won per share. We believe that many investors may opt to take some profits if the stock pops to more than 100,000 won per share. 

Kakao Pay - Slightly Lower Our Base Case Valuation

United States

Upstart Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, provides cloud-based artificial intelligence (AI) lending platform to improve access of credit while reducing the risk and costs of lending for bank partners.

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Upstart Holdings (UPST US)

Upstart: 73% Down - Here Are 5 Factors Driving The Stock Down

Upstart is down 73% from its all-time highs after delivering a robust earnings report that saw revenue grow over 200%. There are 5 key factors...

Investi Analyst

MoneyLion: The Downside Looks Limited and Valuations Remain Attractive

MoneyLion shares look undervalued relative to peers and our 12-month price target of $9.00 per share implies ~50% upside

Andrei Zakharov

MoneyLion - An Oversold Fintech Stock Following a SPAC Merger

MoneyLion is an oversold fintech stock following a SPAC merger. Our base case valuation of MoneyLion over the next year is $9.5 per share, which...

Douglas Kim

Kakao Pay - Slightly Lower Our Base Case Valuation

Our base case valuation of Kakao Pay is 81,829 won per share, which is reduced by 9% than previously mainly due to lower sales estimates in 2022...

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: 73% Down - Here Are 5 Factors Driving The Stock Down

Upstart is down 73% from its all-time highs after delivering a robust earnings report that saw revenue grow over 200%. There are 5 key factors...

Investi Analyst

MoneyLion: The Downside Looks Limited and Valuations Remain Attractive

MoneyLion shares look undervalued relative to peers and our 12-month price target of $9.00 per share implies ~50% upside

Andrei Zakharov

MoneyLion - An Oversold Fintech Stock Following a SPAC Merger

MoneyLion is an oversold fintech stock following a SPAC merger. Our base case valuation of MoneyLion over the next year is $9.5 per share, which...

Douglas Kim

Kakao Pay - Slightly Lower Our Base Case Valuation

Our base case valuation of Kakao Pay is 81,829 won per share, which is reduced by 9% than previously mainly due to lower sales estimates in 2022...

Douglas Kim