Upstart Holdings (UPST) Stock

Upstart Holdings Inc (NASDAQ:UPST), an AI lending marketplace, has seen its shares drop by 13.9% to $67.83 following a downgrade from J.P. Morgan.

Upstart (UPST 0.46%) became a public company in December 2020, with its shares initially priced at $20 each. Within a year, the stock soared to $401, increasing 20 times, thanks to very low interest rates that benefited its AI-driven loan origination system.

Users of Zacks.com have been paying a lot of attention to Upstart (UPST) lately. Therefore, it's important to understand the key information that could influence the stock's future.

Due to a stabilizing financial performance, Upstart's shares (UPST -1.27%) are rising. Over the last six months, they have increased by 200% (as of November 22), significantly outperforming the S&P 500 index, which had a total return of 13% in the same timeframe.

In this episode of After Earnings, Ann talks to Dave Girouard, the CEO and co-founder of Upstart, about how the company utilizes AI to evaluate creditworthiness. Dave discusses the drawbacks of FICO scores, the data points Upstart considers, their recent earnings, and plans for future growth.

Upstart (UPST) has received a Zacks Rank #2 (Buy) upgrade, indicating increased confidence in the company's potential earnings. This could lead to a rise in the stock price soon.

Upstart had a successful quarter, but there's additional information to consider.

Upstart's earnings for the third quarter were better than expected, thanks to high demand for personal and auto loans, which led to a 46% rise in its share price and a $2.2 billion increase in market capitalization. The company's revenue grew by 27% compared to the previous quarter, with improvements in important areas like conversion rates and automated credit decisions. Although the outlook for the fourth quarter is positive and interest rates are favorable, Upstart's valuation seems too high, so I decided to take my profits.

Upstart Holdings has experienced better performance in the third quarter, with a 43% rise in lending volume and positive adjusted EBITDA, but it is still considered a risky investment. The company's AI lending models are still being tested and have not been proven during an economic downturn, which raises questions about their long-term viability. Additionally, Upstart's dependence on funding partners and its high EV/revenue ratio of 10x, compared to the 3.4x of its competitors, indicates that it might be overvalued at the moment.