Upstart Holdings
The stock had drawn considerable interest on social media from mid-July to early-October, when it climbed 267% in a short period of time, fueled by strong earnings and institutional buyers. Currently, the stock is down 38% from its highs in early-October. Overall, it still remains up 459% from its close on the first day of trading.
Inside the Numbers
In Q3, Upstart reported $0.60 in earnings per share which was a 275% improvement from last year's Q3. Revenue was more than 250% higher at $228.5 million. This was also better than analysts' expectations of $214.9 million.
Next quarter, Upstart is forecasting revenue between $255 million and $265 million in revenue, above expectations of $227.6 million. Net income projections also came in above estimates at $48 million to $50 million vs expectations of $24.5 million.
On the surface, Upstart's performance was quite impressive which makes the stock's decline puzzling. One possibility is that traders had even higher expectations given the stock's strong performance since last quarter. However, this type of risk and behavior is common in high-multiple stocks.
Stock Price Outlook
Upstart is a fintech company that uses artificial intelligence to make lending decisions. Given this intersection of popular, growth trends, it's easy to see why shares have been so well-bid. It collects a fee for finding loans that are then serviced by banks.
The company has made significant progress since it went public in terms of all important metrics such as revenue growth, earnings growth, and an increase in the number of banks and other companies on its platform. The company also has significant growth potential in terms of expanding into other categories as it recently did with auto loans.
Since Upstart doesn't take credit risk, the business has very impressive margins that should only expand. Given this upside, investors with high-risk tolerance should consider taking advantage of the stock's recent weakness.
