Why Upstart Should Be on Your Radar

Based in California, Upstart Holdings (UPST) provides a cloud-based, artificial intelligence (AI) enhanced lending platform. I am bullish on the stock.

In 2021, UPST start has been an “easy come, easy go” story. Folks who didn’t take profits at the right time coughed up all of their gains, and possibly even more than that.

There’s an opportunity here, as the market for AI-powered loans didn’t suddenly disappear overnight.

Furthermore, as we’ll see, Upstart is definitely on the right track, financially speaking.

So now, let’s start off by recounting the fast rise and equally precipitous fall of UPST stock. (See Analysts’ Top Stocks on TipRanks)

A Quick Look at UPST Stock

From the beginning of 2021 through the summer, UPST stockholders had already doubled their money.

The share price ascended from $44 to $120 during that time. What more could you ask for?

Apparently a lot more, as UPST stock then zoomed to an astounding 52-week high of $401.49 in October.

Now, there’s an old saying the markets: it’s OK to be a bull or a bear, but pigs get slaughtered.

It’s gruesome, but it’s true. Folks who got greedy with UPST stock in October were handed a major drawdown as the share price tumbled back to $172 in early December. It now sits slightly above $190.

Hopefully, we can all learn a lesson about greed from what happened to UPST stock.

Nothing Objectionable Here

Given the quick drop in UPST stock, you might assume that Upstart’s in a real financial mess.

However, that’s actually not the case at all.

Consider this: during the third quarter of 2021, Upstart reported revenue of $228.5 million. For one thing, that’s a year-over-year increase of 250%.

Moreover, this result beat Wall Street’s consensus estimate of $215 million.

As well, during 2021’s third quarter, the company reported earnings per share (EPS) of $0.60.

Compared to the year-earlier quarter, that a 253% improvement. It’s also an easy beat compared to the analysts’ EPS consensus estimate of $0.33 per share.

In other words, both the top and bottom lines revealed blockbuster results. It’s almost unfathomable, then, that UPST stock is trading at its current, low price.

A Little Bit of Bragging

Usually, it’s not enjoyable to witness an executive’s braggadocio.

In the wake of such a fabulous quarter, however, Upstart co-founder and CEO Dave Girouard has earned the right to boast about his company.

Specifically, he observed how far Upstart has come since UPST stock debuted for public trading.

“Since Upstart’s IPO a year ago, we’ve more than tripled our revenue, tripled our profits, tripled the number of banks and credit unions on our platform, and tripled the number of auto dealerships we serve,” Girouard explained.

When we consider those stats, perhaps the early year run-up in UPST stock can be justified.

Since Upstart has tripled in size according to the metrics that Girouard cited, we can forgive the CEO for engaging in some boastful jesting.

“With that many 3s, Upstart is becoming the Steph Curry of the FinTech industry,” Girouard quipped.

Meanwhile, as we round out 2021, Upstart has raised its fiscal-year guidance revenue guidance to $800 million, versus the prior guidance of $750 million.

Wall Street’s Take

According to TipRanks’ analyst rating consensus, UPST is a Moderate Buy, based on five Buy, one Hold, and one Sell ratings.

The average Upstart price target is $299.29, implying 52.9% upside potential.

The Takeaway

Could UPST stock double from here? It’s certainly possible, but patience might be required.

First and foremost, let’s just see if the technical damage in UPST stock can be repaired.

That being said, it’s fine to be optimistic about Upstart.

The company is doing well financially, to the point where a little bit of bragging is acceptable — until the next earnings report, at least.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article. ​