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UPST Stock Is a Lay-Up, Not A Slam Dunk, But The Points Still Count

IPO fintech Upstart Holdings (NASDAQ:UPST). By some metrics UPST stock barely looked back in 2021.

The website for Upstart (UPST) is viewed through a magnifying glass focused on the company's logo.
Source: Postmodern Studio / Shutterstock.com

But by others measures, and now sporting a fully-immunized price chart, things may just be getting started once again for UPST stock, which looks more and more like a well-qualified buy.

Happy New Year?

With unheard of devastating mid-winter tornados, wildfires and the Omicron variant continuing to inflict their wraths, saying goodbye to 2021 couldn’t happen fast enough for many people.

The same might be said for bullish Upstart investors who overstayed their welcome or worse, bought into the hype with irresponsible vigor during its feverish thrill ride over the past year.

To be fair (well, at least kinda sorta), shares of this AI-driven personal finance middleman did finish up more than 270%.

And I’d be remiss if I failed to mention Upstart’s heady gain also torched its constituent large-cap, tech-heavy Nasdaq’s performance by more than tenfold.

Still, there wasn’t much to celebrate about UPST stock as the countdown to 2022 unfolded during the last quarter of the year. And fairly, that’s bound to have hurt despite the headline win.

Since peaking in the first half of October at just over $400, the fact is Upstart shares have lost 63% of their valuation.

And without rushing to judgment, the difference between a return approaching 900% and one around 270% is worthy of introspection and learning from.

Today though and quite promisingly, conditions look good for UPST stock to put on a show that could delight bulls once more. Just don’t forget that history lesson.

UPST Stock Weekly Price Chart

Upstart Holdings (UPST) deeper confirmed bottom, but is the bearish cycle in UPST stock finished?

Source: Charts by TradingView

Following earnings this past month, Upstart’s CEO compared the company’s performance to that of NBA superstar Steph Curry, but that isn’t wholly appropriate.

Much ado has been made of the company’s tripling of profits, sales and partnerships, culminating in the outfit’s top brass saying the fintech arena may have a Steph Curry in its midst.

But another factor to be mindful of is a still-steep sales multiple in excess of 20x UPST’s marketprice.

Unfortunately, even after a correction in excess of 60%, Upstart stock can’t be called an unequivocal slam dunk.

Still, given how the fourth quarter of 2021 played out on the price chart, today UPST shares do offer a decent price for buying into a growth narrative at relative value.

Technically, a weekly chart December inside doji in UPST stock was confirmed less than two weeks ago.

The price pattern also enjoys a bullish stochastics crossover, a lifetime angular support line and is sandwiched in-between the 62% and 76% Fibonacci levels.

All told, it’s a solid starting position for a bull cycle in UPST to emerge. But to be clear, it’s more of a lay-up situation than a spectacular slam dunk.

With a key failure already occurring at the 62% level, a downward-pointing lower Bollinger Band, UPST stock’s riskier pricing and a broader market that’s more richly-priced than not, it’s time to play a strong defensive game as much as an offensive one.

Today, given the mixed environment surrounding Upstart, investors might consider an intermediate bull call spread versus buying stock, due to its upside leverage and ability to minimize larger downside exposure.

One such vertical, which looks reasonably attractive if UPST is closer to completing a bearish cycle than not and keeps the powder dry for even more unreasonably chilling days ahead, is the April $165/$200 bull call spread.

On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.

Article printed from InvestorPlace Media, https://investorplace.com/2022/01/upst-stock-is-a-lay-up-not-a-slam-dunk-but-the-points-still-count/.

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