tiprankstipranks
After 39% Decline, What’s Next for Upstart Stock?
Stock Analysis & Ideas

After 39% Decline, What’s Next for Upstart Stock?

After outpacing the Nasdaq composite index by a significant margin this year, shares of Upstart Holdings (UPST) have dropped over 39% in one month. 

The noteworthy decline in the shares of this AI-based lending platform provider comes on the back of valuation concerns and an expected slowdown in growth rate. It is worth noting that Upstart stock skyrocketed this year (and is still up about 409%, even given the recent pullback), which drove its valuation higher. 

Meanwhile, its top and bottom-line growth rate decelerated on a quarter-over-quarter basis. For context, Upstart’s revenues in Q3 rose by 18% on a quarter-over-quarter basis. This compares unfavorably with a 60% sequential growth in Q2. 

Moreover, management’s Q4 revenue guidance reflects a further deceleration in sequential growth rate, to 12-16%. 

Now What?

While Upstart’s growth rate could moderate in the near term, TipRanks’ Stock Investors tool indicates that investors are adding its stock on the pullback. Per the tool, 3.1% of the investors who hold portfolios on TipRanks have increased their exposure to Upstart stock in the last 30 days.

Further, its growing TAM (total addressable market) and opportunities in the auto market provide a long runway for growth and support my bullish outlook. 

During the Q3 conference call, Upstart’s CEO Dave Girouard said that the auto lending market is about six times bigger than the size of the personal loan market. Moreover, the company has tripled the number of dealers on its platform on a year-over-year basis. This positions Upstart well to capitalize on the large auto lending market. 

Also, its growing scale, strong transaction volumes, and improvement in loan conversion rate augur well for growth.

Wall Street’s Take

Given the steep growth in its price in 2021 and valuation concerns, Wall Street maintains a cautiously optimistic outlook on Upstart stock. On TipRanks, Upstart has received 4 Buys, 2 Holds, and 1 Sell, for a Moderate Buy consensus rating.

Meanwhile, Upstart scores a 6 out of 10 from TipRanks’ Smart Score rating system, implying that UPST stock will likely perform in line with the market.

See Top Smart Score stocks >>

The average Upstart Holdings price target of $307.86 implies 48.3% upside potential to current levels.

Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles