We see 15.8% of de-risked upside in Uber Technologies Inc. (UBER) to $100 the next 4-10 weeks. (Remember, we like to under-promise and over-deliver.) To this end, we think UBER has better-than even-odds of powering to par into the election.
With Tesla's Autonomous Driving not yet ready for prime time, big investors will continue powering into UBER aggressively this quarter. With the biggest overhang on UBER shares now removed, we expect immediate follow-through in its shares.
From a PM's perspective, it will look good owning UBER into year-end. This is another reason fresh buying will overwhelm new selling as the breakout builds in the coming weeks.
Why 15.8% of upside?
Well, there is an 18-point differential between the high point and the low point of this gorgeous Volatility Contraction Pattern (VCP) breakout. Add $18 bucks to the top of the base at $82 and we get to $100:
UBER also has an excellent track record of sprinting higher for consecutive weeks once All-Time Highs are attained. To wit, UBER jacked up 28% IN FIVE WEEKS the last time it made all time highs. We think the same dynamic will manifest once again:
Friday’s VWAP level was $84.92 was Friday's. We plan to add to our large and levered position – it’s a Top 5 position for us – on ANY and ALL dips to $84.92-$83 range next week.
Of note, should Friday's $87 high-of-the-day price be taken out, immediately on Monday morning, we will also have a Buy Stop in place through these levels. This will ensure we have our max-size on should this scenario unfold.
Stop Loss: We plan to use a 2% close below the strongly rising 10-day EMA – should be ~$77 on Monday and ~$81-$82 by the end of the week – as our stop on this trade.
We have a 10-Conviction rating on this UBER trade. We have attached 85% odds it works.
For those looking for quiet and consistent upside, the Select Str. Financial ETF (XLF) looks primed for 5%-6% upside between now and year-end. XLF's weekly chart is a beauty:
To each their own. Financials have never been our thing. Instead, we love growthy Inflections, where there exists likely upside to forward numbers, relative to Consensus Estimates. The bigger dispersion the better!
The Fintech space has caught our eye. We think Paypal Holdings Inc. (PYPL) has $100 in it should the company post another upside beat. It's a bit stodgy for us though. As my Dad used to say, "You can't dance with all the girls at the dance, John!"
We remain long Affirm Holdings Inc. (AFRM). The stock is finally ready to break out. While it has been a rough trader, its character dramatically changed for the better last week.
With multiple upgrades lately, the Sell Side has finally woken up and smelled the coffee. We believe there is strong upside to forward numbers. The lazy PM's on the Buy Side, who have finally done the work and see this big upside as well, are now barreling into the stock.
Note how its On Balance Volume has already made new 52wk Highs AHEAD of the stock - SUPER BULLISH. There is a ton of power forming here. We therefore plan to add our final tranche to the name on any pullback to Friday's VWAP at $46.25 or on any immediate close above $50.
AFRM's base is powerful. Once $52 gets taken out, we think the stock will stage a spirited move to the low $70s in the coming months/quarters, an easy-to-see $20 Measured Move on the chart below. AFRM is a Top 10 name for us entering this week.
While Affirm is clearly the behemoth of the Buy Now Pay Later space, Sezzle Inc. (SEZL) is the true upstart whose stock has outperformed even our expectations when we recommended the stock at $75 earlier this year.
Six trading days ago we alerted our High Touch Subscribers to a recent pullback buy when it briefly dipped into the $140s. Since then the stock has rocketed back toward its All-Time Highs. We think there is a lot more to go.
Sezzle's forward numbers remain too low.
SEZL had a sizeable step up in Downloads in July and August, relative to June, logging THE BEST YoY growth within all of the Buy Now Pay Later space:
Currently, the Sell Side has Q3 declining sequentially compared to Q2. When you digest the above download stats and Monthly Active User (MAU) stats, to us, it appears that Q3 is going to be another barnburner.
We attach 80% odds Q3 is up 5-15% sequentially, relative to Q2. This would mean a $60M revenue handle for Q3, or 50% YoY growth, which would compare quite favorably relative to consensus, which calls for ONLY 29% top-line growth:
Instead of earning $6.74 this year, we think Sezzle reports $8.50-$9 in EPS. Keep in mind, the company recently announced an important banking partnership with WebBank, one that will allow it to offer additional ancillary banking services to its customer base – a factor that will enhance Sezzle’s positive flywheel in the ecosystem it has built.
With revenues poised to rise to $350M in 2025 and Sezzle positioned to continue growing earnings strongly – we see $13-$14 in EPS in 2025 - as new investors discover the name, we see additional upside for SEZL from current levels. How much upside?
Well, we think a 5x sales multiple on 2025's likely $350M in revenues is warranted. That gets us to a $1.75B market cap, or around 75% upside from current levels to $315.
At $180, SEZL is still VERY ATTRACTIVE versus our 2025 numbers, trading for only ~14x forward earnings.
It's been a long fall from grace for Upstart Holding Inc. (UPST) since it peaked in the Go-Go Covid Years. UPST offers less upside than SEZL but all the pieces to Upstart’s story have finally come together.
Take a look at the encouraging price action of the past two months on the UPST Weekly Chart:
After being left for dead, we think UPST is poised to break out from its long-term basing pattern. If we are correct, we see 40% upside for the stock over the next 6-9 months.
Upstart's business inflected negatively when inflation spiked and interest rates rose in 2022 and 2023. The company's banking partners pulled in the reins on buying their loans and then Upstart ran into a brick wall financing these loans themselves.
After a long slog, Upstart has righted its ship, upgrading its internal AI Models, and most importantly, it replenished its balance sheet with a $300M Offering.
Things got interesting late last week when Upstart announced a commitment by Blue Owl, a private credit lender, to purchase $2B of Upstart's loans over the next 18 months:
This is big. It should translate into Upstart kickstarting its loan engine.
Our thesis is simple. We think the combination of Upstart's near-$400M offering and Blue Owl’s subsequent commitment to purchase $2B in loans over the next 18 months sets the stage for a big guide up for Q4.
Looking further out, it should also mean we see a return to profitability in Q4. This is a big consideration that should bring a host of new institutional investors back into the stock. We want to be ahead of that.
Why only a 7.5 conviction?
Well, UPST is certainly not cheap. And we really are much better at identifying and optimizing Top Tier Inflections in real time as opposed to predicting them. So, until we see the big guide up we believe is coming, UPST will be on the lower rung of our position sheets.
But, after seeing the strength in Financials on Friday, along with the move in AFRM, we took a very small position in Upstart into the close. Doing so, forced us to do the work on the name this weekend.
We like what we see with forward numbers. Take a look. We think there is a real possibility 2025 will have big upside coming versus where the consensus stands now:
Stay tuned.
As for the technicals, in the near-term, the Shorts look out of luck. Once we get a close to new 52wk Highs, it is easy to see how this can run to $60 quickly, and then, in the next quarter or two, to $70+.
Stop Loss: We plan use the 50day SMA as a Stop, as the stock is prone to wild swings. With this in mind, we plan to size UPST much more conservatively than our current positions in AFRM, UBER and SEZL.
Remember, we do think a big breakout is coming, with the positive fundamentals poised to soon inflect and the group strength expected to build further in the coming days. It is NOT coincidental AFRM, UPST and SEZL moved like they did on Friday. Financials are hot and getting exposure to the leading groups is a core component to our process.
Good luck to all in the week ahead. With new leaders inflecting, earnings coming in strongly and the economy in decent standing, we expect a new spate of inflection point ideas to be forthcoming. They usually come in bunches during strong earnings seasons and that is what we are expecting for this earnings season as well.
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Disclosure: We are long UBER stock and calls, AFRM stock and calls, SEZL stock and UPST stock and calls in the accounts we oversee. We may change our positioning at a moment’s notice, without notifying you of any such moves.
Disclaimer: All of the information in this piece has been prepped by Inflections Consulting LLC. Readers should know that it would be incorrect to assume that past and future names of interest will be profitable or will not turn into a loss. Inflections Consulting LLC does not and will not assume any liability for any loss that could occur if you invested in such stocks written about.
All the content in these reports have been prepared by Inflections Consulting LLC. We believe our sources to be reliable, but there is no guarantee here. The information in this piece does not constitute either an offer nor a solicitation to buy or sell any of the securities name-dropped in this piece.
All contents are derived from original or published sources believed reliable, but not guaranteed. This report is for the information of Top Tier Inflections members/subscribers, only. Absolutely none of our content may be reproduced in whole or in part without prior written permission from Inflections Consulting LLC. All rights reserved.
In no shape or manner should the views expressed in this piece be considered investment advice. We reserve the right to change our positioning in our UBER, AFRM, SEZL, UPST stock and options positions at a moment’s notice without updating you on any such change in opinion and positioning. That may be tomorrow, even before our price target is hit. Facts change, our opinions can change quickly too.
Investors need to consider their investment risk tolerance before investing in the stock market and also before investing in any of the stocks mentioned in this report.
