Upstart Holdings Inc (NASDAQ:UPST) Stock Surges 388% This Year: More To Come?
While it is true that it has been a turbulent year in the stock markets due to a number of factors there have been some stocks that seem to have weathered the storm somewhat. One such stock is that of Upstart Holdings Inc (NASDAQ:UPST), which has been in the midst of a remarkable rally and managed to clock gains of 388% this year so far.
In light of such gains, it may be a good move for investors to take a greater interest in the company and its stock. This article would provide you with a closer look into the company and also the recent developments which may shape the fortunes of the stock in the near term.
The company continued to be on the radars of investors yesterday as it continued on its upward move. Experts suggest that there could be more upside but that needs to be investigated more closely. The Upstart stock had first been publicly listed in 2020 for $20 a share and eventually rallied to an all-time high of $401 a share in 2021. However, it collapsed soon after and settled at $12 a share last year.
Upstart is an artificial intelligence software firm that helps banks and financial institutions to measure the creditworthiness of possible borrowers with accuracy. That is a tough market to crack given the fact that most banks still use FICO scores for that purpose. However, the company’s pitch is different. It offers artificial intelligence models which can assess as many as 1600 data points related to a potential borrower accurately and quickly. The speed of the system allows for as many as 84% of the approvals to be completely automated and instant. There would be no human input necessary.
On the flipside, FICO only looks into 5 data points and the final assessment may take days or weeks. During the pandemic in 2020 and later in 2021, interests were lowered to record levels and stimulus packages were offered by the United States government. Many borrowers took the opportunity to go on borrowing sprees. At the time, Upstart had been highly active and processed a huge volume of loan originations.
The company’s revenues went up threefold year on year and the stock hit an all-time high. Although things changed in 2022, the company revealed this year that its AI models were working fine. 53% fewer loans originated by Upstart had ended in defaults as per data published by the company. Socially, the company approves applications from 46% more Hispanic borrowers and 43% more black borrowers and all of that happens because the system is entirely based on AI. In 2023, the number of funding partners for Upstart went up to 99 and some of those partners made a commitment of as much as $2 billion.
The company projected that in the second quarter, its revenues would rise 31% sequentially and that indicates that the company believes that the worst period may be over. In 2025, the company expects its revenues to touch $912 million, with a year-on-year growth of 20%. Although the stock has rallied strongly this year so far, the stock is still valued at reasonable levels and could be one to watch out for.
