Is Upstart's Stock a Buy After Crashing This Week?

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Is Upstart's Stock a Buy After Crashing This Week?

Motley Fool2022-05-12

Nearly all tech stocks have gotten hammered in the past few months. At Tuesday's prices, the tech-heavy Nasdaq Composite was down almost 25% in 2022, and many individual stocks have fallen much more ...

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TriciaChang
·2022-05-12
H
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V K
·2022-05-12
Pls like tyvm[Happy]
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Ahsiang
·2022-05-12
Noooooooooooo
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At Tuesday's prices, the tech-heavy Nasdaq Composite was down almost 25% in 2022, and many individual stocks have fallen much more ...</p>\n\n<a href=\"https://www.fool.com/investing/2022/05/11/is-upstarts-stock-a-buy-after-crashing-this-week/\">Source Link</a>\n\n</div>\n","source":"fool_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Upstart's Stock a Buy After Crashing This Week?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Upstart's Stock a Buy After Crashing This Week?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-12 11:12 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2022/05/11/is-upstarts-stock-a-buy-after-crashing-this-week/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Nearly all tech stocks have gotten hammered in the past few months. At Tuesday's prices, the tech-heavy Nasdaq Composite was down almost 25% in 2022, and many individual stocks have fallen much more ...</p>\n\n<a href=\"https://www.fool.com/investing/2022/05/11/is-upstarts-stock-a-buy-after-crashing-this-week/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"UPST","symbol_name":"Upstart Holdings, Inc.","start_time":0,"source_url":"https://www.fool.com/investing/2022/05/11/is-upstarts-stock-a-buy-after-crashing-this-week/","article_id":"2234259958","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2234259958","pubTimestamp":1652325122,"sourceInfo":{"source_id":"fool_stock","name":"Motley Fool"},"weMediaInfo":null,"summary":"Shares fell 57% after the company reported Q1 earnings, but that might have been overdone.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"UPST":"Upstart Holdings, Inc."},"translate_title":"新贵的股票在本周暴跌后是买进吗？","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"UPST":1},"content_text":"Nearly all tech stocks have gotten hammered in the past few months. At Tuesday's prices, the tech-heavy Nasdaq Composite was down almost 25% in 2022, and many individual stocks have fallen much more than that. Upstart Holdings has taken one of the hardest hits lately, getting slammed after reporting earnings late Monday -- it fell 56.7% on Tuesday and started Wednesday down a little more.Is this a bargain buy or a value trap? The company's disappointing guidance reflected the macroeconomic uncertainty for the coming year, yet it might be getting oversold right now. At Wednesday morning's prices, the stock was down about 80% year to date, which potentially gives investors a major discount if it can survive this tough economic environment.Image source: Getty Images.What went wrongThe first figure that startled investors in Upstart's quarterly update was its lowered guidance. In the fourth quarter of 2021, the company guided for $1.4 billion in 2022 revenue, but this was pulled back to $1.25 billion in Monday's report.Why would Upstart pull back guidance by $150 million after just one quarter? The answer is that the company is projecting lending activity to decline. Because of the Federal Reserve's plans to increase interest rates, and the increased risk lenders can expect, the price of loans facilitated by Upstart has to increase, which results in lower approval rates. Upstart facilitated 465,500 loans in Q1, compared to 495,000 in Q4.Another concern is rising default rates or the percentage of loans going unpaid. This was to be expected as the effects of federal stimulus faded, as Upstart CFO Sanjay Datta noted earlier this year. Still, it creates some uncertainty. Much of Upstart's growth over the past few years was facilitated by a friendly economic environment where interest rates were very low and government stimulus checks helped consumers pay back loans. Now, however, the U.S. is entering a tricky environment where consumers' finances are likely to be worse than they were over the past few years. That means there's a question mark hanging over Upstart's head about how it can perform going forward.The last concern that investors saw was that the company took some unexpected loans onto its balance sheet in Q1. This wasn't much -- Upstart's loan book rose to $600 million from $252 million in the fourth quarter -- but these were loans that Upstart took on because its banking or investing partners weren't able to. The company said it expects this to be temporary, but if it isn't, that could be worrisome for the investors who bought the company for its use of artificial intelligence (AI), not for the credit risk it takes.How Upstart can surviveUpstart was founded in 2012, and we've never seen it operate in an environment of rising rates plus inflation. However, there are reasons to believe it can survive this rough period.The primary reason is that the company's AI engine has outperformed compared to traditional, FICO-based risk models. Its AI is continuously learning and improving, too, which could lead to even greater outperformance. Its AI engine studies more than 1,500 variables and over 21.6 million repayment events to make more accurate loan determinations.This has allowed the company to see incredible growth, even as consumer balance sheets are starting to worsen. In the first quarter, Upstart saw revenue jump 156% year over year to $310 million, and net income more than triple from $10 million in the year-ago quarter to $33 million in Q1 2022.Upstart also saw continued expansion in its number of banking partners. In Q1, the company had 57 bank partners, which soared over 36% sequentially and 217% year over year. This is a testament to the company's health, though it will be critical to monitor over the coming months. If the company sees its bank partner count slow or decline, that could indicate that Upstart is losing its appeal, potentially due to faulty loan determinations.Is it a buy now?For most companies forecasting a year of 47% growth, a valuation like Upstart's would look like a steal. At Wednesday morning's prices, Upstart traded at roughly 20 times earnings, which is its lowest valuation ever as a public company.All in all, Upstart might have gotten unfairly beaten down this quarter. Of course, the risks should be monitored with an extremely close eye going forward, but a 57% drop in one day might not be justified considering the company's AI advantage. Additionally, despite the macroeconomic uncertainty, the company is still expecting to see top-line improvements this year.With this in mind, it might make sense for growth-oriented investors to add a few shares to your portfolio. Given the major uncertainties, this should be a very small amount. However, if the company can continue growing at its expected rate for the rest of the year and make it through this shift to higher default rates, investors would likely be handsomely rewarded over the long term.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9064261655,"gmtCreate":1652327888177,"gmtModify":1676535079559,"author":{"id":"3560421500323385","authorId":"3560421500323385","name":"TriciaChang","avatar":"https://static.tigerbbs.com/5cb6619edb253a8bb8b2776c7d9b0e02","vip":1,"crmLevel":6,"crmLevelSwitch":0,"authorIdStr":"3560421500323385","idStr":"3560421500323385"},"htmlText":"H","listText":"H","text":"H","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9064261655","repostId":2234259958,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9064282050,"gmtCreate":1652326750870,"gmtModify":1676535079233,"author":{"id":"3577323914202336","authorId":"3577323914202336","name":"V K","avatar":"https://static.tigerbbs.com/536d624e5750dcffec704eeed9bc003b","vip":1,"hat":"https://static.tigerbbs.com/ae1f49570794979e009a5efdeb6f4789","crmLevel":8,"crmLevelSwitch":1,"authorIdStr":"3577323914202336","idStr":"3577323914202336"},"htmlText":"Pls like tyvm[Happy]&nbsp;","listText":"Pls like tyvm[Happy]&nbsp;","text":"Pls like tyvm[Happy]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9064282050","repostId":2234259958,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9064215992,"gmtCreate":1652325439516,"gmtModify":1676535079037,"author":{"id":"3582617881962608","authorId":"3582617881962608","name":"Ahsiang","avatar":"https://static.tigerbbs.com/310f96e7696af85ae33ece774a483d15","vip":1,"crmLevel":3,"crmLevelSwitch":0,"authorIdStr":"3582617881962608","idStr":"3582617881962608"},"htmlText":"Noooooooooooo","listText":"Noooooooooooo","text":"Noooooooooooo","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9064215992","repostId":2234259958,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":28,"commentSize":3,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}