Start Up an AI-Powered Lending Revolution with Upstart

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Make no mistake about it: California-based Upstart (NASDAQ:UPST) is seeking to upend the lending business as we know it. More than your typical investment, a stake in UPST stock is a way to participate in a modern-day grassroots movement.

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

To be honest, traditional lending is a prohibitivly complicated and laborious process. Yet, Upstart is using machine learning to make it easier and more inclusive.

Founded in 2012, Upstart is on a mission to revolutionize how lending institutions determine creditworthiness, beyond just credit reports and FICO scores. People aren’t numbers, and Upstart’s artificial intelligence (AI) powered platform enhances borrowers’ access to loans at reasonable rates.

In late 2021 and early 2022, technology and financial stocks came under pressure — a double-whammy for Upstart’s shareholders. However, this presents a potential buying opportunity as more customers and financial institutions come to trust and appreciate Upstart’s commendable mission.

UPST Stock at a Glance

Going back to where it all started, Upstart’s initial public offering (IPO) took place on Dec. 16, 2020, after the company priced its offering at $20 per share.

UPST stock’s first trade on the Nasdaq Exchange was for $26, and the share price soared 30% in afternoon trading on that first day.

That was only the beginning of the rocket ride, however. If you can believe it, the Upstart share price catapulted to $100 in February of 2021, followed by $200 in August, $300 in September and (briefly) $400 in mid-October.

Let’s not mince words here. When a stock goes from $26 to $400 in a matter of months, something’s out of whack. A retracement, therefore, was almost inevitable.

As we alluded to earlier, negative price pressure on tech and financial stocks weighed on UPST stock in 2021’s fourth quarter and early 2022. Consequently, the stock pulled back to $109.

Good for Customers, Great for the Company

In other words, you may have an opportunity to buy the shares at the same price as a year ago. It’s not every day that we get to turn back the clock like this, and own a piece of a company that’s possibly transforming an entire industry.

Just consider how Upstart is threatening traditional lenders and their old-school business models. With Upstart’s tech-enabled platform, 67% of loans were instantly approved and fully automated in 2021’s third quarter.

Upstart considers itself to be a two-sided business which connects consumers to AI-enabled bank partners. This is a transformative concept — but is it fiscally viable?

To answer that question, we only have to look at the data. During 2021’s first quarter, Upstart’s generally accepted accounting principles (GAAP) total revenue grew 90%. This growth rate increased to a whopping 1,018% in 2021’s second quarter, and 250% in the third quarter.

Credit Unions Come Calling

Like it or not, Upstart’s AI-powered revolution won’t happen without the participation of at least some banking institutions.

The good news is that these institutions are increasingly joining up with Upstart to improve the lending and borrowing experience. In particular, two credit unions have recently partnered with Upstart.

One of them is Washington D.C.-based AgFed Credit Union, which has partnered with Upstart to provide personal loans, with the objective of better reaching new members in the communities it serves.

AgFed CEO Margie Click praised Upstart’s “modern, all-digital lending experience,” which will help AgFed “meet the expectations and needs of today’s consumer.”

Meanwhile, New York-based Corning Credit Union (CCU) is working with Upstart to offer AI-powered personal loans to more customers. Corning Credit Union is a $2.1 billion credit union with a membership base that includes more than 1,700 employer groups, associations and businesses.

“Through the strategic partnership with Upstart, CCU is able to deliver a modern, all-digital experience powered by AI to lend to more people,” explained Corning Credit Union Senior Vice President and Chief Administrative Officer Jason Bierman.

The Takeaway for UPST Stock

Clearly, Upstart is earning trust and participation from both clients and financial firms.

This is necessary for Upstart to continue on its disruptive, innovative path. That’s bad news for traditional, prohibitive lenders, but it’s great for the customers.

It’s also good for Upstart’s investors. UPST Stock gets an “A” in my Portfolio Grader. With UPST stock, there’s an opportunity to participate in an exciting fintech movement, at a very attractive price point.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

Louis Navellier, who has been called “one of the most important money managers of our time,” has broken the silence in this shocking “tell all” video… exposing one of the most shocking events in our country’s history… and the one move every American needs to make today.


Article printed from InvestorPlace Media, https://investorplace.com/2022/01/upst-stock-is-starting-up-an-ai-powered-lending-revolution/.

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