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Upstart - AI Stock Analysis
Analysis generated December 6, 2024
Upstart Holdings, Inc. is a leading AI-driven lending platform that partners with banks and credit unions to provide affordable credit by leveraging machine learning technology. The company's AI algorithms help identify accurate risk factors in loan underwriting more effectively than traditional credit scoring methods. This innovative approach ensures that more people get access to loans while reducing the risks associated with lending.
Fundamental Analysis
In the latest quarter, Upstart generated a revenue of $162 million. This represents an impressive increase of 27.04% compared to the previous quarter and a 20.50% increase year over year. These figures indicate strong top-line growth and reflect the company's increasing market penetration and customer acquisition.
Upstart's net income for the last quarter was $6.8 million, which is an increase of 87.59% compared to the quarter before and a substantial increase of 83.24% from the same quarter last year. This shows significant improvement in profitability, likely driven by operational efficiencies and revenue growth.
However, there is a slight concern with EBITDA, which was $45 million for the last quarter. While this is a modest increase of 10.87% compared to the previous quarter, it represents a 16.04% decrease from the same quarter last year. The decline in EBITDA year over year needs closer scrutiny, as it could suggest rising operational costs or other margin pressures.
Another point to consider is the insider selling activity observed in recent months, which could be a bearish signal. Investors should be cautious as insider selling might indicate that those close to the company expect slower growth or face internal challenges.
Technical Analysis
From a technical perspective, Upstart's stock price is currently trading at $77.16. This is a significant increase of 42.94% from a month ago, signaling a positive short-term trend. Over the past year, the stock has soared by 127.81%, showcasing strong long-term gains.
Despite these gains, the stock's trend has shifted to bearish. The Simple Moving Average (SMA10) stands at 75.84, down from the previous SMA10 of 75.98. This decline suggests a potential downturn in price movement ahead.
Moreover, the Relative Strength Index (RSI) is at 74.6, indicating that the stock may be overbought and potentially facing a bearish condition. An RSI above 70 often suggests that the stock might experience a price drop soon.
Alternative Data Analysis
Examining alternative data points, Upstart appears to be in a phase of growth. Currently, the company has 41 open positions, up by 17% over the last couple of months, indicating hiring activity and potential future expansion.
However, the business outlook from Upstart employees is quite concerning, with only 30% of employees holding a positive outlook, down by 6% recently. This decline suggests internal concerns and possible dissatisfaction among staff, which can impact productivity and growth.
Customer engagement metrics show mixed results. Upstart has 3.3 million visitors to its website, with no significant changes recently, suggesting stable but not accelerating interest. On social media, the Instagram page has 42,000 followers, down by 1%, and the Twitter page maintains 18,000 followers, with no meaningful increase or decrease, indicating stagnant interest levels.
Additionally, the AltIndex's AI score for Upstart is 28, which acts as a strong sell signal based on fundamental, technical, and alternative data analysis. This low score indicates potential challenges and may suggest caution for prospective investors.
Conclusion and Recommendation
In conclusion, Upstart demonstrates strong revenue growth and improved profitability, as evidenced by the recent financial results. However, the decline in EBITDA, insider selling activities, bearish technical indicators, and concerning employee sentiment present potential challenges.
Therefore, while Upstart has shown commendable growth and expansion in the past year, several factors suggest caution moving forward. Investors should weigh these positives against the potential risks before making any decisions. Given the current analysis, it is advisable to consider a hold or sell position on Upstart, depending on one's risk tolerance and investment horizon.
Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.
