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Upstart Holdings (UPST)
NASDAQ:UPST
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Upstart Holdings
(NASDAQ:UPST)64Neutral
Positive Factors
Loan Growth
Loan growth is accelerating in all three products: personal, auto, and HELOC.
Revenue Guidance
UPST is raising its FY25 revenue guide by ~20% vs. consensus, vowing to reach GAAP net income breakeven for the FY.
Negative Factors
Valuation Concerns
The valuation remains too high with shares up 165% year-over-year and 12% year-to-date.
Upstart Holdings (UPST) vs. S&P 500 (SPY)
Market Cap
$5.78B
Dividend YieldN/A
Average Volume (3M)6.70M
Price to Earnings (P/E)―
Beta (1Y)4.84
Revenue Growth24.50%
EPS Growth49.38%
CountryUS
Employees1,193
SectorFinancial
Sector Strength93
IndustryCredit Finance
Share Statistics
EPS (TTM)-1.46
Shares Outstanding93,711,000
10 Day Avg. Volume5,796,362
30 Day Avg. Volume6,696,517
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)26.84
Price to Cash Flow (P/CF)-13.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$82.82Price Target Upside39.76% Upside
Rating ConsensusHold
Number of Analyst Covering13
Upstart Holdings Business Overview & Revenue Model
Company DescriptionUpstart Holdings Inc provides credit services. The company provides a proprietary, cloud-based, artificial intelligence lending platform. The platform aggregates consumer demand for loans and connects it to the network of Upstart AI-enabled bank partners. The revenue of the company is primarily comprised of fees paid by banks.
How the Company Makes MoneyUpstart Holdings primarily makes money through fees collected from banks and credit unions that utilize its AI-driven lending platform. The company's revenue model includes a combination of referral fees, platform fees, and servicing fees. Referral fees are earned when a borrower is referred by Upstart to a lending partner and a loan is originated. Platform fees are charged to lending partners for the use of Upstart's platform to originate loans, while servicing fees are collected for managing the repayment process of these loans. Additionally, Upstart earns interest income from loans held on its balance sheet. The company also benefits from partnerships with various financial institutions which expand its reach and facilitate the scaling of its operations.
Upstart Holdings Financial Statement Overview
Summary
Upstart Holdings shows improvement in cash flow and a reduction in debt, but faces significant challenges in revenue consistency and profitability. The balance sheet is mixed, with moderate equity but declining stockholders' equity. Overall, financial stability is improving, but income generation needs to be addressed.Income Statement
Upstart Holdings has experienced significant volatility in its income statement metrics. The company has faced declining revenues over the years, with a notable decrease from $853 million in 2022 to $637 million in 2024. The net profit margin and EBIT margin have been negative for the past three years, indicating ongoing profitability challenges. However, the gross profit margin remains strong at 100% due to the absence of cost of goods sold figures provided.45
Neutral
Balance Sheet
The balance sheet shows a mixed picture. Upstart Holdings has improved its leverage position with a reduction in total debt to zero by 2024, significantly alleviating financial risk. The equity ratio remains moderate, suggesting a balanced capital structure. However, the consistent decline in stockholders' equity and the negative return on equity highlight concerns about sustaining shareholder value.50
Neutral
Cash Flow
Cash flow metrics have shown improvement, especially with the transition from negative operating cash flow in 2023 to positive in 2024. The free cash flow has also turned positive, which is a positive sign. However, the operating cash flow to net income ratio is volatile, indicating potential fluctuations in cash generation related to profitability.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 636.53M | 513.56M | 853.29M | 851.86M | 241.44M | Gross Profit |
| 636.53M | 488.66M | 665.29M | 734.28M | 203.86M | EBIT |
| -172.86M | -256.52M | -103.02M | 145.39M | 19.79M | EBITDA |
| -172.86M | -215.12M | -89.51M | 140.88M | 11.77M | Net Income Common Stockholders |
| -128.58M | -240.13M | -108.67M | 135.44M | 5.98M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 829.67M | 368.40M | 422.41M | 986.61M | 250.82M | Total Assets |
| 2.37B | 2.02B | 1.94B | 1.82B | 477.25M | Total Debt |
| 1.45B | 1.23B | 1.09B | 795.80M | 82.06M | Net Debt |
| 658.84M | 860.79M | 664.77M | -190.81M | -168.76M | Total Liabilities |
| 1.73B | 1.38B | 1.26B | 1.01B | 177.00M | Stockholders Equity |
| 633.22M | 635.30M | 672.43M | 807.08M | 300.25M |
| Cash Flow | Free Cash Flow | |||
| 185.49M | -172.58M | -697.59M | 153.24M | 10.09M | Operating Cash Flow |
| 186.33M | -160.49M | -674.68M | 168.35M | 15.70M | Investing Cash Flow |
| -237.73M | -118.45M | -114.13M | -143.88M | 136.52M | Financing Cash Flow |
| 559.87M | 214.27M | 130.03M | 855.43M | 79.05M |
Upstart Holdings Technical Analysis
Negative
59.26
Price Trends
67.53
Negative
65.58
Negative
48.15
Positive
Market Momentum
-1.21
Positive
37.80
Neutral
8.24
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UPST, the sentiment is Negative. The current price of 59.26 is below the 20-day moving average (MA) of 71.87, below the 50-day MA of 67.53, and above the 200-day MA of 48.15, indicating a neutral trend. The MACD of -1.21 indicates Positive momentum. The RSI at 37.80 is Neutral, neither overbought nor oversold. The STOCH value of 8.24 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UPST.
Upstart Holdings Risk Analysis
Upstart Holdings disclosed 82 risk factors in its most recent earnings report. Upstart Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Upstart Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $2.46B | 12.81 | 17.19% | ― | 25.51% | 36.96% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% | |
64 Neutral | $5.78B | ― | -20.31% | ― | 24.50% | 49.38% | |
64 Neutral | $14.35B | 34.26 | 7.64% | ― | 29.33% | ― | |
64 Neutral | $18.25B | ― | -7.14% | ― | 46.27% | 74.39% | |
63 Neutral | $234.51M | ― | -20.76% | ― | -5.22% | 60.29% | |
53 Neutral | $1.33B | 25.75 | 3.83% | ― | 3.63% | 27.77% |
* Financial Sector Average
Performance Comparison
UPST
Upstart Holdings
59.26
33.27
128.01%
LC
LendingClub
11.71
3.73
46.74%
ENVA
Enova International
95.32
32.64
52.07%
OPRT
Oportun Financial
6.49
2.73
72.61%
SOFI
SoFi Technologies
13.09
5.69
76.89%
AFRM
Affirm Holdings
57.01
20.14
54.62%
Upstart Holdings Earnings Call Summary
Earnings Call Date: Feb 11, 2025 | % Change Since: -12.00% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
Upstart demonstrated strong growth in revenue and origination volumes with significant product and model innovations. Financial performance showed improvements with positive adjusted EBITDA, although GAAP profitability was not achieved. Funding commitments increased, supporting future growth. However, elevated loan prices and increased stock-based compensation expenses presented challenges.Highlights
Strong Revenue and Origination Growth
In Q4, origination volume grew 33% and revenue grew 35% sequentially. Year-over-year growth was 68% for originations and 56% for revenue.
Significant Product Growth
Auto and HELOC originations grew by about 60% sequentially, with small-dollar relief products growing 115% quarter-on-quarter.
Model Innovations Boosting Accuracy
Launch of Model 19 with Payment Transition Model (PTM) capability, improving model accuracy by considering intermediate delinquency states.
Improved Financial Metrics
Positive adjusted EBITDA for two consecutive quarters, with Q4 adjusted EBITDA at $39 million and adjusted earnings per share of $0.26.
Increased Funding Commitments
Upsized commitments by $1.3 billion with capital partners and secured a $150 million personal loan warehouse facility.
High Automation in Loan Processing
Fully automated loans reached 91%, improving operational efficiency and processing speed.
Lowlights
GAAP Profitability Not Yet Achieved
Despite improved financial metrics, Upstart came close but did not achieve GAAP profitability in Q4 2024.
High Loan Prices Due to Elevated UMI
Loan prices remain high due to elevated Upstart Macro Index (UMI), impacting borrower affordability.
Increased Stock-Based Compensation Expense
Shift to one-year equity grants expected to negatively impact stock-based compensation expense due to higher accounting charges.
Company Guidance
During the earnings call for the fourth quarter and full year 2024, Upstart presented a robust financial performance, highlighting significant growth across various metrics. The company reported a 33% sequential increase in origination volume and a 35% rise in revenue for Q4, translating to a 68% year-over-year growth in originations and 56% in revenue. Their auto and HELOC product categories experienced approximately 60% sequential growth, while the small-dollar relief product surged by 115% quarter-on-quarter. These achievements contributed to a total net revenue of $219 million for Q4, marking a 56% increase year-on-year. The company also achieved a positive adjusted EBITDA of $39 million for the quarter, with a contribution margin of 61%. Upstart outlined its strategic priorities for 2025, aiming to 10x its leadership in AI and return to GAAP net income profitability by the second half of the year.Upstart Holdings Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Upstart Holdings Expands Board, Appoints Peter Bernard
Positive
Feb 19, 2025
On February 18, 2025, Upstart Holdings announced an expansion of its Board of Directors to nine members and appointed Peter Bernard as a Class II director, effective February 19, 2025. Bernard, who has an extensive background in banking and risk management, currently chairs the board of Barclays Bank U.S., and has held prominent roles at firms like Root Capital and D.E. Shaw & Co. His appointment is set to enhance Upstart’s expertise in funding innovation and expansion, aligning with the company’s focus on leveraging AI in lending to make it more affordable, inclusive, and transparent.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.