1 Super Stock Down 80% You'll Regret Not Buying on the Dip

Core Viewpoint - Upstart has rebounded from a significant decline in stock price due to its innovative AI-driven loan origination platform, which is positioned to capture a substantial market opportunity in the lending industry [1][3][14]. Company Overview - Upstart went public in December 2020 at $20 per share and saw its stock price surge to $401 within a year due to low interest rates [1]. - The stock price fell 97% to around $12 in 2022 as the Federal Reserve raised interest rates, reducing consumer demand for loans [2]. - As of now, Upstart's stock price has recovered to approximately $78, though it remains 80% below its all-time high [3]. AI-Driven Lending Transformation - Upstart's AI algorithm evaluates 1,600 metrics to assess borrower creditworthiness, significantly improving the speed and accuracy of loan decisions compared to traditional methods [5]. - The company automates 91% of loan decisions, allowing for a more efficient process [5]. - Upstart's AI model, Model 18, makes 1 million predictions per applicant, enhancing the fairness and accuracy of interest rate determinations [6]. Market Position and Growth - Upstart's AI approach enables it to approve double the number of loans compared to traditional methods, with interest rates approximately 38% lower on average [7]. - The company has expanded its offerings beyond unsecured personal loans to include secured car lending and home equity lines of credit (HELOC) [8]. - Demand for loans is increasing as interest rates decline, which is beneficial for Upstart's growth [8]. Financial Performance - In Q3 2024, Upstart originated 186,786 unsecured personal loans, a 65% increase year-over-year, and 1,080 car loans, which was up 53% from the previous quarter [11]. - The company reported total revenue of $162 million in Q3 2024, a 20% increase from the same period last year, marking its highest quarterly revenue for the year [13]. - Upstart is projected to achieve $587.5 million in total revenue for 2024, a 14% increase from 2023, with further growth expected to $812.7 million in 2025, representing a 35% growth rate [15]. Valuation Metrics - Upstart's current price-to-sales (P/S) ratio is 12.4, above its long-term average of 8.9, but the forward P/S ratio based on 2025 revenue forecasts is 8.8, slightly below its average [16]. - The company has identified a $3 trillion annual loan origination market across various segments, indicating significant growth potential [16][17]. - Upstart has only originated around $40 billion in loans to date, suggesting substantial room for future expansion [17].