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Should Investors Worry About Upstart’s Recent 200%?

It’s easy to look at massive gains in a short space of time and end up buying at the top, but it’s just as easy to be suspicious of such moves and miss out. 

This article was originally written by MyWallSt. Read more market-beating insights from the MyWallSt team here.

Is Upstart’s (NASDAQ: UPST) recent run a case of the former or the latter?

 

Just getting (up)started?

Shares in the financial software vendor closed at a record $164.87 yesterday, marking a 171% jump in just 3 sessions. In fact, since going public in December with a valuation of $2.1 billion, it has gone from strength to strength and is now valued at $12 billion. Many are looking at this recent performance and thinking: 

“Is this GameStop all over again?”

After all, there have been whispers about Upstart on the r/WallStreetBets message board on Reddit. 

Such an assumption could be premature though, as Upstart is enjoying a deserved purple patch right now following an impressive first-ever quarterly earnings call last Wednesday:

  • Revenue: $84.4 million (+39% year-over-year (YoY))
  • Operating income: $10.4 million (~+300% YoY)
  • Adj. EBITDA: +123% YoY
  • Q1 ’21 revenue guidance: $112 million to $118 million (+80%) 

These numbers aside, the real game-changer for Upstart is its acquisition of Prodigy Software, a provider of cloud-based automotive retail software. The almost half-a-trillion-dollar U.S. automotive industry is suffering from a serious lack of buy-now-pay-later opportunities. Through its Prodigy acquisition, Upstart suddenly has a chance to become a leading player in the lucrative space. 

So, before you dismiss Upstart as just another stock caught in ‘the squeeze’ (or before buying solely because you believe it to be a quick buck), you should take a look at its fundamentals and the growth potential for its auto financing business.

 

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