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Upstart - AI Stock Analysis
Analysis generated May 8, 2024
Upstart Holdings, Inc. is a cloud-based artificial intelligence (AI) lending platform that utilizes advanced machine learning models to assess credit risk more fully than traditional credit-scoring systems. The company collaborates with bank partners to provide consumer loans and aims to enable easier access to credit with lower interest rates, using non-traditional variables to predict creditworthiness. Founded in 2012, Upstart has been at the forefront of leveraging technology to streamline the lending process and reduce risk.
Fundamental Analysis
Inspecting the financial fundamentals of Upstart reveals mixed signals. The revenue for the last quarter was $140M, marking a 4.28% increase from the previous quarter, signifying a mild positive momentum in sales growth. However, a year-over-year comparison exposes a 4.49% decrease, potentially suggesting challenges in maintaining long-term revenue growth.
The company's net income was $42M in the last quarter, which represents a short-term falter with a 5.17% drop from the previous quarter. Nonetheless, on a yearly basis, Upstart demonstrated resilience with a 23.28% increase, pointing to overall profitability improvements. The Ebitda at $38M showed gains of 1.32% quarter-over-quarter and a significant 29.99% enhancement year-over-year, reflecting operational efficiency. The company's P/E ratio of 18.03 may hint at a balanced valuation, not reflecting an extreme in market sentiment.
Recent actions by company insiders, who have been selling their stock, could be interpreted as a lack of confidence in short-term performance or personal portfolio decisions—nonetheless, it is an area of concern for potential investors.
Technical Analysis
Upstart's recent stock price performance paints a bearish picture. The stock price of $23.11 is an 8.62% decline from the prior month and may unsettle investors watching short-term price movements. Despite this, a look back at the year-over-year growth shows an impressive 64.02% increase, signifying a strong long-term upward trend.
Other technical indicators support a bearish outlook in the short term. The SMA10 of 23.73 has slightly dipped compared to its previous value of 23.77, hinting at a downward movement. Additionally, the high Relative Strength Index (RSI) of 73.6 signals an overbought condition, typically leading to a correction or reversal.
Alternative Data Analysis
Turning to alternative data, Upstart's job postings have decreased by 56% in recent months, which could imply an effort to rein in expenses or a shift in business needs. It is not an encouraging sign for a company expected to be in a growth phase.
As for customer acquisition, an 18% increase in website traffic is quite bullish, suggesting a higher intake of prospective customers, a positive indicator for future revenue growth. On the social media front, the 1% decrease in Instagram followers and stable Twitter following reveal mixed signals about customer engagement and brand appeal.
Conclusion and Recommendation
Analyzed data presents a complex image of Upstart. Fundamental indicators point to a degree of positive growth, yet short-term hurdles are evident. Technical analysis suggests caution due to recent bearish trends and an overbought RSI condition. Alternative data indicates strong customer interest but potential internal scaling back. Considering all factors, particularly the solid year-over-year net income increase and strong website traffic growth, Upstart could be a candidate for a long-term growth portfolio, with a recommendation to monitor closely for any signs of deteriorating fundamentals or further insider selling. Given the mixture of short-term bearish indicators and long-term growth prospects, investors might consider entering positions in stages, taking advantage of any price dips provided that the overall growth story remains intact.
