Upstart Introduces Mobile-Based Auto Retail Platform

Artificial intelligence-enabled lending platform Upstart (NASDAQ: UPST) recently announced the launch of its mobile-first Upstart Auto Retail online platform.

Following the news, shares of the company rose 4.6% on Wednesday. The stock, however, pared its gains slightly to close at $117 in the extended trading session.

Details of the Launch

The platform, priced at $599 per month, is aimed at providing customers with convenient access to dealer inventory on their mobile phone, tablet, or desktop browser.

The platform acts as a one-stop shop to bring together both offline and online experiences, making car browsing easy for customers by providing financing and management tools.

Management Commentary

GM of Upstart Auto Retail, Michia Rohrssen, said, “Dealers on our online platform see 66 percent of their traffic come from mobile devices. If you want to deliver the modern buying experience that today’s car buyers expect, you absolutely need a world class mobile experience. Buying a new car is not always a linear process, so we designed the new, mobile-first, online platform not only to adapt to the mobile usage of customers, but also to give the dealer more options to customize for each type of shopper and the pace of purchase.”

Stock Rating

Recently, Piper Sandler analyst Arvind Ramnani reiterated a Buy rating on the stock with a price target of $230, which implies upside potential of 96.4% from current levels.

According to the analyst, the auto business will act as a tailwind for the company. The analyst said, “Accelerated by the acquisition of Prodigy, we believe auto is Upstart’s most critical development effort since the start of the company, as an asset-based product that offers multi-year growth tailwinds by implementing ReFi and Retail loans.”

“The company’s initial offering is projected to achieve ~$1.5B in auto loan volume (almost wholly ReFi) in 2022, as Upstart begins to offload ReFi loan volume to funding partners over the coming months and slowly expand capacity. However, given expansion into ReFi remains early days (interest income now vs. fee-based income over time), we expect limited upside from the auto segment this year, and believe there is upside to our FY23 $1,849M estimate (which includes ~$250M auto contribution),” he added.

The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 5 Buys and 2 Holds. The average Upstart price target of $195.71 implies that the stock has upside potential of 67.1% from current levels. Shares have gained 121.1% over the past year.

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