Should You Buy Upstart Stock While It's Below $100?

Core Viewpoint - Upstart's stock has experienced significant volatility since its IPO, but recent trends indicate a potential recovery as interest rates decline and the business stabilizes, suggesting a favorable outlook for investors [1][3]. Company Performance - Upstart's online lending platform utilizes AI to approve loans based on nontraditional data points, allowing it to serve a broader range of customers [4]. - The company saw impressive growth metrics in 2021, with originated loans growth at 338%, a conversion rate of 24%, and a revenue growth of 264% [6]. - However, in 2022 and 2023, the company faced challenges as interest rates rose, leading to a decline in originated loans, conversion rates, and revenue [6][7]. Recent Developments - As of the first nine months of 2024, Upstart's loans grew again with rising conversion rates due to declining interest rates, and adjusted EBITDA turned positive in Q3 [7]. - Analysts project a 17% revenue increase for 2024, with expectations of a CAGR of 29% from 2024 to 2026, reaching $995 million by 2026 [9]. Financial Position - Upstart ended Q3 2024 with a high debt-to-equity ratio of 2.2 but has refinanced a significant portion of its convertible debt, extending maturities to 2029 [10]. - The company's enterprise value is currently $5.8 billion, translating to 7 times next year's sales, which could rise to 12 times next year's sales if the stock reaches $100 [12]. Market Outlook - The CFO noted improving market conditions and liquidity in the banking sector, which could enhance Upstart's lending environment [11]. - The introduction of the T-Prime program aims to attract super prime borrowers, reducing exposure to riskier customers [11].