The Upstart Holdings stock (NASDAQ:UPST) has gained over 90% in the last month, taking the market cap of the company to over $19B. After earnings were released on 10th August, the share price jumped from $135 to $167 overnight. The price continued this momentum and is now above $260.
Upstart Holdings, Inc.
Upstart is an AI lending platform that partners with banks and credit unions to provide consumer loans using non-traditional variables, such as education and employment, to predict creditworthiness.
They first launched in April 2012 with an Income Share Agreement (ISA) product, which enabled individuals to raise money by contracting to share a percent of their future income. In May 2014, Upstart pivoted away from this product and toward the personal loan marketplace. With this pivot, Upstart began offering a traditional 3-year loan, and has since expanded to offer a 5-year loan product as well.
IPO and Earnings
The Upstart Holdings released through an IPO on 16th December 2020 for $20 per share. They have released three earnings since they went public. The first earnings saw a rally of 170%, the second was followed by a rally of over 110% and most recently in August, we have seen a 90% rise in the share price up to date. It is fair to say that they have caught Wall Street by surprise as the stock price has rise 13x since the IPO and earnings beating expectations by 445%, 47% and 151%. The August earnings reported that Q2 revenue soared by 1,000% to $194M.
Will this growth continue?
Upstart only focus on personal loans for now, but they have ideas of moving into vehicle loans and even mortgages at a later point. This expansion into a wider market will help Upstart continue their progress and growth in the future.
With the stock being up over 10 times since the IPO, is there a worry about a correction? So far, they have beaten even the most bullish predictions from analysts. So maybe the potential still isn’t fully understood yet. The current price will factor in future growth and will correct as and when growth slows in the future. But for now, I think this impressive move will continue for Upstart in the upcoming months.
Is it a buy?
I think until the end of this year and into the next, Upstart is a great choice for your money. In the very short term, we may see a drop in price as investors take profits from this current move. But I believe earnings will continue to be strong and impress once again, leading to continued growth.