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Upstart’s New Lending Moves Raise Eyebrows: Time to Buy?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

Upstart Holdings Inc.’s stock leapt 17.69 percent on Monday, influenced by strong public sentiment after announcing a successful expansion into the international markets and a strategic partnership with a leading fintech company.

Big Moves with Blue Owl Capital’s $2 Billion Commitment

  • A recent partnership with Blue Owl Capital sees a $2B purchase commitment for loans on Upstart’s platform, beginning with a $290M portfolio, aimed at widening affordable credit.

Candlestick Chart

Live Update at 10:36:41 EST: On Monday, October 14, 2024 Upstart Holdings Inc. stock [NASDAQ: UPST] is trending up by 17.69%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

MIT Federal Credit Union Signs on for AI Lending

More Breaking News

  • MIT Federal Credit Union opts for Upstart to offer personal loans to members, a strategy leveraging Upstart’s AI lending marketplace to enhance loan growth and membership.

Price Target Raised by Mizuho, Signals Optimism

  • Mizuho increased its price target for Upstart from $33 to $48, bolstered by market conditions and an improved risk profile, maintaining an Outperform rating.

Overview of Quarterly Earnings: What Lies Beneath

The financial landscape for Upstart reveals a mixed outlook as the Q3 earnings loom on the horizon, scheduled for announcement on Nov 7, 2024. In a nutshell, the forthcoming earnings are about to paint an intriguing picture of Upstart’s journey through the financial labyrinth.

From the CSV data, the recent close of $55.34 shows a noteworthy rise in stock price, flagged by an intraday high at $56.08 — a testament to its burgeoning market appeal. But there’s more beneath the surface.

Key ratios underpinning Upstart’s valuation tell a story of contrasts. The price-to-sales ratio sits at a striking 5.7, and a daring price-to-book value ratio of 7.08 suggests a premium on growth potential. Despite an unsettling EBIT margin of negative 4.3%, the traction shown by the surge in revenue up to $513.56M is undeniable evidence of its expanding footprint.

On the financial strength front, Upstart faces a delicate balance with a total debt-to-equity clocking in at 1.63, yet it’s buoyed by a quicksilver current ratio hinting at healthy liquidity. Meanwhile, the enterprise value echoes a more profound narrative, reflecting investor sentiment that values future promises over immediate gains.

Upstart appears nestled in a nurturing phase; rapid growth brushed with shades of burgeoning expense. Yet, the energetic alliance with Blue Owl Capital hints at sparkling possibilities, smoothing the course for more robust financial terrain and unfolding layers of potential in consumer lending.

Decoding the Headlines: What’s Really Driving the Rally?

Beyond fundamental metrics, the interplay of recent news events exerts a powerful influence on Upstart’s market trajectory. Each headline is an inflection point resonating across trading floors.

Partnership with Blue Owl Capital: Confirmed on Oct 10, 2024, this strategic relationship doesn’t just promise volume – it paves avenues for partnerships, expanding Upstart’s financial arsenal. The market’s pulse quickens with anticipation of widened credit access, a sentiment reflected in its recent market performance. Such collaborations marry Upstart’s cutting-edge AI platform with Blue Owl’s robust purchasing power, promising to reconfigure lending landscapes.

MIT Federal Credit Union’s Leap: This union, announced on Oct 2, 2024, is another feather in Upstart’s cap. The use of AI to offer members personalized loans heralds a new wave of credit expansion. Executives peer through fiscal projections, envisioning tailored lending solutions steering membership growth. An initiative symbolizing a tectonic shift in how credit unions perceive futuristic lending.

Mizuho’s Upgraded Target: The hefty $48 forward target shines a spotlight on optimistic vistas. Mizuho’s reassessment underscores a stronger risk appetite and lower interest bearings — factors aligning the stars for prospective aspirants contemplating entry based on Upstart’s bolstered risk-reward profile.

Conclusion: As the dust settles…

It leaves investors pondering whether Upstart’s red-hot growth is a sustained ascent or a fleeting euphoria. With anticipated earnings on the fiscal horizon and a blockbuster Blue Owl partnership fueling expectations, Upstart embodies both buoyant potential and inherent risk, an enigma within the fintech cosmos.

Despite brewing challenges, the potent cocktail of AI-driven innovation and aggressive market moves weaves a tapestry that entices the speculative and tempts the conservative. With each strategic partnership, Upstart reinforces its foundation and silently urges ever-hopeful investors to embrace the possibilities of financial evolution amidst uncertainty and opportunity.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”