Is Upstart a risky investment?
Key Points. Upstart got off to a hot start after its 2020 IPO but has fallen significantly in recent years. High interest rates and subdued demand for its loans weighed on the business in 2022. Investor demand for credit is returning, and falling interest rates could be a catalyst for the lender.
Key Points. Upstart is financially stable, though its business must improve. Potential rate cuts could be what the doctor ordered. Upstart is a high-risk, high-reward stock looking to turn the corner.
| Pros | Cons |
|---|---|
| Funding possible within one business day Bad-credit or inexperienced borrowers may qualify Option to change your due date | No option for joint loans or cosigners Charges an origination fee Limited loan term options |
Artificial intelligence (AI)-powered lending platform Upstart has originated $38 billion in loans across its 3 million customers — leaving lots of room to grow. That's why, on Tuesday's (May 7) first quarter 2024 earnings call, Upstart executives stressed to investors that the company's future is bright.
Upstart (NASDAQ:UPST) was among the hottest stocks in the pandemic-fueled bull run that ended in 2021. Today, Upstart trades 93% below all-time highs, but I believe it remains a compelling buy for value and contrarian investors and that it can recover some of its losses this year.
Upstart received an A+ rating from the Better Business Bureau (BBB), but unfortunately received an average of just 1.23 out of 5 stars over more than 200 consumer ratings on the BBB website.
UPST Stock 12 Month Forecast
Based on 15 Wall Street analysts offering 12 month price targets for Upstart Holdings in the last 3 months. The average price target is $18.29 with a high forecast of $28.00 and a low forecast of $9.00. The average price target represents a -32.53% change from the last price of $27.11.
Upstart can't catch a break
Upstart delivered smashing results in 2021 when interest rates were low and stimulus checks were flowing, but the business is struggling amid high interest rates. The company said revenue fell 4% to $140 million, which was still ahead of guidance at $134.9 million.
For 2024, analysts expect Upstart's revenue to increase 5%, and the company expects its adjusted EBITDA to turn positive again in the fourth quarter. For 2025, they expect its revenue to grow 33% with a positive adjusted EBITDA margin of 7%. Based on those estimates, Upstart looks cheap at 4 times this year's revenue.
Upstart Holdings Stock Prediction 2025
The Upstart Holdings stock prediction for 2025 is currently $ 50.00, assuming that Upstart Holdings shares will continue growing at the average yearly rate as they did in the last 10 years. This would represent a 84.37% increase in the UPST stock price.
Should I sell my UPST stock?
Upstart Holdings stock has received a consensus rating of sell. The average rating score is and is based on 2 buy ratings, 16 hold ratings, and 39 sell ratings.
As of 2024-07-18, the Fair Value of Upstart Holdings Inc (UPST) is -68.33 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 30.91 USD, the upside of Upstart Holdings Inc is -321.1%. Note: valuation result may not be accurate due to the company's negative EPS.
Upstart Stock Price Forecast 2024-2025
The forecasted Upstart price at the end of 2024 is $26.62 - and the year to year change -35%. The rise from today to year-end: +8%. In the middle of 2024, we expect to see $24.98.
Upstart pioneered the application of artificial intelligence to lending, enabling a system that is dramatically more efficient and more accurate for both borrowers and lenders.
Checking your rate on Upstart will not affect your credit score. When you check your rate, we make a “soft credit inquiry." Soft credit inquiries may appear on your credit report and do not lower your credit score.
Upstart verifies your bank account to confirm your identity, income and debt obligations so they can ensure the accuracy of your loan application. To this end, you'll have to provide login credentials for the bank account listed on your application.
Cons Explained
Potentially high origination fee: Upstart charges origination fees. Depending on the lender and the borrower's profile, the fee can be as high as 12% of the loan amount. 5 Not all lenders charge origination fees, so borrowers with strong credit profiles should shop around.
| Company type | Public |
|---|---|
| Traded as | Nasdaq: UPST Russell 2000 component |
| Industry | Financial technology |
| Founded | April 2012 |
| Founders | Dave Girouard Anna Counselman Paul Gu |
You may prepay your loan in whole, or partially prepay your loan, at any time without penalty. All borrowers have access to an Upstart dashboard. If you would like to pay off your loan early or calculate your payoff amount, click the “Pay Off My Loan” button in your Upstart dashboard.
Upstart had been reporting explosive growth and high profitability prior to inflation and the ensuing high interest rates, but that fell off a cliff when demand for loans fell and higher default rates spooked lenders.
Why is Upstart tanking?
In 2021, the consumer lender made 1.3 million loans worth $11.8 billion. However, rising rates have been a drag on the lender, which has seen loan volume plummet over the past two years. After a strong start in 2022, loans originations really began to drop off. Last year, Upstart made 437,000 loans worth $4.7 billion.
Overall, Upstart is a company that could mount a long-term recovery, but it does not appear to be a good investment today. Even with the company's partners agreeing to fund a much larger volume of loans this year, it's not yet clear that Upstart will see significant revenue growth.
Even though the company probably isn't going out of business, Upstart is clearly not in a position to deliver strong returns. Rising interest rates and the removal of pandemic-era stimulus programs have hit the company harder than expected.
Analyst Price Targets
Based on analysts offering 12 month price targets for UPST in the last 3 months. The average price target is $18.29 with a high estimate of $28 and a low estimate of $9.
Financial Performance Overview
The total fee revenue reached $138 million, up 18% from the first quarter of 2023. Despite the revenue growth, Upstart experienced a significant net loss of $64.6 million, which is an improvement from the $129.3 million loss reported in the same quarter the previous year.
