Upstart Holdings Share Price Forecast February 2022 – Time to Buy UPST?
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Shares of AI lending platform Upstart Holdings (NASDAQ: UPST) are in the green today, after closing at $104.60 as of 14th February (19:59 EST). The company has generated more than $800 million of revenue in 2021, beating estimates of $500 million. With Upstart shares significantly down from their all-time high price, many investors are wondering whether it’s the right time to buy Upstart shares.
Upstart –Technical Analysis
Upstart’s financial statement indicates a market cap of $8.573 billion with total assets worth $1.606 billion. Revenue for 2020 was at $233.42 million with a profit margin of 2.56% compared to $164.19 million in 2019.
Moving averages such as Exponential Moving Average (30)(114.75), Simple Moving Average (30)( 108.16), Exponential Moving Average (50)(134.98), Simple Moving Average (50)( 127.79) and Exponential Moving Average (100)(165.84) are indicating a sell action. Oscillators such as Relative Strength Index (14)(45.45), Stochastic %K (14, 3, 3)(52.76), Commodity Channel Index (20)(31.96), Average Directional Index (14)(18.29) and Awesome Oscillator(−9.74) are neutral.
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Recent Developments
Upstart Holdings was first listed in December 2020 at $20 per share and reached a high of $401, delivering a return of 1,900% by October 2021. It was founded by Paul Gu, a Thiel Fellow, Dave Girouard, former President of Enterprise Google, and Anna Counselman, former Manager of Global Enterprise Customer Programs and Gmail Consumer Operations at Google. The company raised a $1.75 million seed round and a subsequent series A round of $5.9 million.
Upstart uses AI- technology to accurately and quickly assess 1,600 data points to better evaluate a borrower’s ability to repay a loan. This resulted in 75% fewer defaults among Upstart-originated loans compared to those assessed the traditional way. As it is not a lender itself, Upstart does not carry any credit risk. It sells AI technology to institutions that want to integrate it into their own application processes as well as loan origination for banks. This has resulted in at least one of Upstart’s partner banks removing its FICO scoring from its assessment process completely.
While Upstart began by originating unsecured personal loans, The company has recently expanded into automotive finance. It estimates a $672 billion per year addressable market for the automotive loan market. It has a strategy of targeting car dealerships as a source of loan originations. Upstart has acquired car-dealer sales platform Prodigy and has redesigned it to function both as a sales and loan origination tool. It is now known as Upstart Auto Retail.
Should You Buy UPST shares?
The company’s management expected to generate $500 million of revenue for the full year at the beginning of 2021. The company is yet to release its fourth-quarter 2021 result. However, it has generated over $800 million, a significant 60% beat. Analysts now expect the company to deliver $1.2 billion in 2022. The company is profitable and there are high chances that it could beat all estimates with the help of its automotive segment.
Upstart shares trade at a forward price-to-earnings multiple of 36 and have $2.35 in estimated earnings per share for 2022. While it is pretty expensive, its rapid growth rate supports that premium. At about $100, the shares are at a discount to the $401 they traded at just a few months ago, and that’s an opportunity. With Wall Street investment bank CitiGroup recently attributing a $350 target on Upstart, now could be a good time to buy the shares.
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