Core Insights - Upstart Holdings, Inc. has experienced a remarkable 114.3% gain over the past six months, significantly outperforming the Financial Select Sector SPDR Fund and the S&P 500, which gained 16.7% and 14.8% respectively [1] - The surge in Upstart's stock price is primarily attributed to macroeconomic shifts, particularly the U.S. Federal Reserve's interest rate policies, which have improved the outlook for the company [1][2] Financial Performance - The Federal Reserve's recent decision to cut rates by 50 basis points is expected to increase loan demand, benefiting Upstart's AI-driven loan assessment model [2] - Upstart's annual revenue run rate has halved from around $1 billion due to previous aggressive interest rate hikes, but further rate cuts could lead to a surge in loan originations and revenue recovery [3] - Second-quarter 2024 revenues declined to $128 million, highlighting the need for favorable rate cuts to regain lost ground [4] Sales Estimates - Zacks Consensus Estimate for the current quarter (September 2024) is $150.14 million, with projections for the next quarter (December 2024) at $160.68 million and for the current year (December 2024) at $566.15 million, reflecting a year-over-year growth estimate of 10.24% [5] - For the next year (December 2025), the sales estimate is projected at $687.15 million, indicating a growth rate of 21.37% [5] Earnings Estimates - Zacks Consensus Estimate for earnings in the current quarter (September 2024) is -$0.14, with expectations of -$0.02 for the next quarter (December 2024) and -$0.62 for the current year (December 2024) [7] - The earnings estimate for the next year (December 2025) is projected at $0.49, showing a significant potential recovery [7] Competitive Advantage - Upstart's use of AI has automated 91% of its loan approval process, providing a competitive edge over traditional lenders like SoFi and LendingClub [8] - This automation allows Upstart to offer lower annual percentage rates (APRs) to riskier borrowers without compromising credit performance, unlike its competitors who rely on traditional credit assessment methods [9] Market Expansion - Upstart has expanded its loan portfolio beyond personal loans to include auto loans, home equity lines of credit, and small-dollar relief loans, diversifying its revenue streams [10] Valuation Concerns - Upstart's current valuation is high, with a forward 12-month price-to-earnings (P/E) multiple of 183.41X, significantly above the industry average of 15.04X, raising concerns about potential vulnerability to market shifts [11] Conclusion - While Upstart has shown extraordinary gains, its premium valuation suggests limited near-term upside, but long-term growth prospects remain promising due to AI innovations and favorable interest rate trends [13]

Deal Overview - Upstart Holdings has sold up to $2 billion of consumer installment loans to Blue Owl Capital, including $290 million of personal loans already disbursed and future loans under a forward-flow agreement over the next 18 months [1] - The deal represents one of Upstart's largest purchase commitments ever, according to Upstart CFO Sanjay Datta [2] Upstart's Business Performance - Upstart achieved record highs in contribution margin (67% in Q2) and positive cash flow during its August earnings call [3] - 88% of Upstart's unsecured loans are fully automated, enabling faster scaling of originations and a more efficient loan application process [3] Blue Owl's Strategic Moves - Blue Owl recently completed its acquisition of Atalaya Capital Management, which manages over $10 billion in assets as of June 30 [4] - The Atalaya acquisition expands Blue Owl's alternative credit presence and strengthens its position in direct lending [5] Industry Trends - Upstart has been pivoting to private credit, evidenced by its recent deals with Castlelake LP, Eltura Capital Management, Centerbridge Partners, and Ares Management [3] - Blue Owl is expanding into additional credit products, aligning with its acquisition of Atalaya and the Upstart deal [2][4]

The Federal Reserve cut its benchmark interest rate last month, and more cuts are likely coming. The past few years have been tough operating environments for interest rate-sensitive, cyclical industries. One company that encapsulates this struggle is Upstart Holdings (UPST 0.33%), the artificial intelligence (AI) consumer lender. Upstart stock ran up significantly in the months following its December 2020 initial public offering (IPO). The consumer lender benefited from declining interest rates, a backdrop ...

Upstart Holdings, Inc. (UPST) closed at $43.03 in the latest trading session, marking a +0.33% move from the prior day. The stock trailed the S&P 500, which registered a daily gain of 0.71%. Elsewhere, the Dow gained 1.03%, while the tech-heavy Nasdaq added 0.6%. The the stock of company has risen by 27.42% in the past month, leading the Finance sector's loss of 4% and the S&P 500's gain of 6.41%. Analysts and investors alike will be keeping a close eye on the performance of Upstart Holdings, Inc. in its up ...

Core Viewpoint - Artificial intelligence (AI) is generating significant value, but not all AI companies will succeed, as evidenced by the contrasting performance of Nvidia and other AI firms [1][3]. Group 1: Nvidia's Performance - Nvidia's stock increased by 239% last year and an additional 158% in 2024, adding $2.7 trillion to its market capitalization, making it the second-most valuable company globally [1][2]. - The company is a leader in designing powerful graphics processing units (GPUs) for data centers, crucial for AI model development, and is unable to meet the high demand [2]. Group 2: Challenges in the AI Sector - Many AI companies are struggling to deliver financial results that match their innovations, leading to significant declines in stock prices, with SoundHound AI down 74%, C3.ai down 85%, and Upstart Holdings down 89% from their all-time highs [3][4]. - The unpredictability of the AI landscape makes it difficult for investors to identify potential winners and losers [4]. Group 3: Investment Strategies - Exchange-traded funds (ETFs) can provide a diversified approach to investing in AI, reducing the risk of catastrophic losses from individual stock failures [5]. - The iShares Expanded Tech Sector ETF, established in 2001, offers exposure to a wide range of technology stocks, including those involved in AI [6][7]. Group 4: iShares ETF Holdings - The iShares ETF holds 279 stocks, with its top 10 holdings accounting for 53.9% of the total portfolio value, including major players like Meta Platforms, Nvidia, Apple, and Microsoft, all of which are leveraging AI technologies [8][9][10]. - Nvidia's flagship H100 GPU has set benchmarks for AI development, and the company is set to release a new generation of chips that could enhance performance by up to 30 times [11]. Group 5: ETF Performance - The iShares ETF has delivered a compound annual return of 10.8% since its inception, outperforming the S&P 500's 8.2% average annual return [13]. - Over the last 10 years, the ETF achieved a compound annual return of 20%, significantly exceeding the S&P 500's 13.2% return, highlighting the potential of technology stocks in the AI sector [14][15]. Group 6: Future Outlook - AI is projected to add substantial value to the global economy, with estimates of $7 trillion by Goldman Sachs and up to $200 trillion by Cathie Wood's Ark Investment Management by 2030 [15]. - The iShares ETF is positioned as a viable option for investors looking to capitalize on the growth of AI while mitigating risks associated with individual stock selection [16].

Core Viewpoint - Upstart has experienced a significant stock price increase of 45% in the past couple of months, but it remains 90% below its all-time high, raising questions about its long-term viability as an investment opportunity [1] Company Overview - Upstart has created an AI-powered platform that evaluates over 1,600 variables related to potential borrowers, which is utilized by more than 100 banking partners to enhance lending activities [2] - Since its inception, Upstart has originated loans totaling $39 billion, indicating a substantial market presence, yet it still has a long growth trajectory ahead given the total annual loan market is valued at $3.1 trillion [3] Market Conditions - A potential positive factor for Upstart is the recent reduction in the Federal Reserve's benchmark interest rate, which could stimulate borrowing demand [4] - However, Upstart's revenue has declined by 1% in 2022 and 39% in 2023, although projections suggest an 11% increase in sales for the third quarter, albeit from a low base [5] Valuation and Financial Health - The current price-to-sales ratio for Upstart is 6.2, reflecting a higher valuation compared to the previous year, indicating improved market sentiment [6] - Upstart has reported a net loss of $119 million over the past six months, raising concerns about its financial stability [8] Competitive Landscape - Upstart's reliance on favorable external conditions, particularly interest rates, highlights its cyclical nature, which may be more pronounced than traditional banks [7] - Major banks like JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup dominate the lending market and have the resources to develop their own AI capabilities, potentially undermining Upstart's competitive advantage [10] Long-term Outlook - Upstart's current market capitalization stands at $3.4 billion, but achieving significant growth will require numerous favorable conditions, leading to skepticism about its long-term prospects [11]

Upstart Holdings, Inc. (UPST) closed the most recent trading day at $38.94, making no change from the previous trading session. This move was narrower than the S&P 500's daily loss of 0.17%. Meanwhile, the Dow lost 0.44%, and the Nasdaq, a tech-heavy index, lost 0.04%. Shares of the company have appreciated by 7.18% over the course of the past month, outperforming the Finance sector's loss of 0.26% and the S&P 500's gain of 1.25%. Market participants will be closely following the financial results of Upstar ...

Core Insights - Upstart (UPST) was a leading stock during the 2021 speculative growth boom but has since experienced a decline of over 90% from its peak [1] - The stock's significant drop is attributed to various market factors, but there is potential for recovery as the Federal Reserve enters a rate-cutting cycle [1] Company Performance - Upstart's stock has shown a sharp rebound recently, indicating a possible turnaround for the company [1] - The video discusses the reasons behind the stock's decline and the potential for it to become a major winner in the upcoming economic environment [1] Market Context - The analysis suggests that Upstart could benefit from the Federal Reserve's rate-cutting measures, positioning it favorably in the fintech sector [1] - The current market conditions may provide a conducive environment for Upstart's growth and recovery [1]

A financial researcher and avid investor with a keen eye for innovation and disruption, as well as growth buyouts and value stocks. Keeping an eye on the pace of high tech and early growth companies, I write about current events and the biggest news surrounding the industry, and strive to provide readers with ample research and investment opportunities. Analyst's Disclosure: I/we have a beneficial long position in the shares of UPST either through stock ownership, options, or other derivatives. I wrote this ...

It has been a good ride for Upstart (NASDAQ: UPST ) investors ever since the company reported earnings in early August. Shares have risen over 40% on better than expected results, a reduction of loans held on its balance sheet, and a possible Inevitable Investor is a private investor and speculator with 13 years of investing experience. An accountant by training, my investing style leans towards quality-orientation, rather than a pure growth investing, or value investing approach.The Inevitable Investor, is ...