Upstart Holdings and Why It’s Still a Winner

Upstart Holdings (NASDAQ:UPST) stock holds a special place for me.

In this photo illustration the Upstart (UPST) logo seen displayed on a smartphone screen
Source: rafapress /

After pounding the table for it in January, and preparing to do so again in February,  I convinced myself to buy some shares. In less than a month they were up over 50%.

The reason is simple: earnings. I said a few weeks ago they would prove important. They were. Net income of nearly $59 million, 71 cents/share fully diluted, and revenues of $287 million, up 340% year over year, will boost any stock.

But I’m not here to gloat. I’m here to ask whether that was a one-off, or if we can expect more.

Reset Expectations

Upstart offers software that replaces loan officers. It uses artificial intelligence to make loan decisions. The software looks at 1,000 variables, and Upstart says it lets banks loan 173% more money while keeping loss ratios stable.

That’s powerful stuff. It’s like the legend of steel-driving man John Henry, if it were applied to the banker in “Stagecoach.”

As fast-growing tech stocks fell out of favor last year, however, so did Upstart. Shares were trading as high as $390 each as recently as October. Third quarter earnings weren’t bad, net income of $29 million, 37 cents per share, on $210 million in revenue. The market just wasn’t interested.

Rather than argue with the market, analysts dropped their ratings and price targets. The price of Upstart stock dropped 28% in January alone. In early February, Visa (NYSE:V) announced an alliance with Pagaya, an Upstart competitor. By mid-February, the average rating on Upstart was a hold.

The positive fourth quarter report seemed to cast those worries aside, but the stock is falling again. Likely due to the on-going war in Ukraine. War is unhealthy for economies and other living things.

UPST Is Still a Still a Buy

The Visa partnership is potentially disruptive, but the market can handle competition.

Upstart’s algorithm is based on data. The more data it collects on customers, the more accurate its decisions can be. This means every time it signs up a new bank or credit union, its value to existing customers can also grow.

The Great Resignation is also working in Upstart’s favor. When loan officers leave, Upstart gets access to their decisions, and the data behind them. The experience is not lost, which isn’t the case with, say, a Cobol programmer.

Even at $152/share, this is not a cheap stock. Last year’s revenue was $848 million. The company’s market capitalization is $12.2 billion. You’re paying 15 times revenue and 100 times earnings. But you’re also seeing revenue growth of 350% for the full year, the market is still in its early days, and Upstart is profitable, bringing 16% of revenue to the net income line.

This led Bank of America (NYSE:BAC) to give Upstart a double upgrade recently, from underperform to buy. The way to wealth is to find good companies and buy them when they’re down, out of favor. That describes Upstart, which was down $7/share in early trade on March 1.

The Bottom Line on UPST Stock

Find me a statement that will be true in all times and all circumstances.

This too shall pass.

It’s an old saying that applies to great stocks like Upstart. The only risk a long-term investor has is if they bought at the high and now face the possibility that a huge bank, like JPMorgan Chase (NYSE:JPM) or Bank of America, will buy Upstart with a huge premium that’s still lower than what you paid for it.

If that happens let it be a lesson to you. Don’t buy stocks at their highs. Take note of those stocks, then let them settle to lows. Don’t be stampeded by a fear of missing out (FOMO). You’re going to miss out on some things.

Don’t miss out on UPST Stock.

On the date of publication, Dana Blankenhorn held long positions in BAC and UPST. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at, tweet him at @danablankenhorn, or subscribe to his Substack.

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