Upstart Stock Is the AI-Powered Fintech Investment You Can’t Ignore
InvestorPlace - Stock Market News, Stock Advice & Trading TipsUPST stock is trading at a steep discount, and could rise as Upstart partners with a slew of banks and...
Are stodgy, traditional lenders feeling threatened in 2022? That's exactly what California-headquartered Upstart (NASDAQ:UPST) wants, and audacious UPST stock holders are effectively partaking in a financial-market revolution.
Is this revolution an opportunity for skeptical investors, though? After all, disruptive companies come and go, and only the best ones endure.
In Upstart's defense, the company's financial report from a few months ago make a compelling bull case. As it turned out, during 2021's third quarter, Upstart reported $228 million in total revenue, up a whopping 250% year-over-year.
Despite that outstanding result, the Upstart share price is far below its peak. Perhaps there's a buying opportunity here, as Upstart's recent collaborative efforts could set the stage for a rapid rebound.
UPST Stock at a Glance
Going back to where it all began, Upstart's initial public offering (IPO) took place on December 16, 2020. Prior to that, the company had priced its offering at $20 per share.
UPST stock's first trade on the Nasdaq exchange was for $26, and the bulls completely commandeered the price action from there. The share price soared to more than $400 in October 2021.
That was one heck of a wild ride, but soon the investors would suffer from a major hangover. Nasdaq-listed companies were suddenly out of favor on Wall Street in late 2021, and Upstart was swept into the bargain bin with other tech-related businesses.
Fast-forward to mid-February 2022, and UPST stock was trading at around $105. This represents an opportunity for contrarian investors to consider a stake in Upstart, especially if they like the company's growth prospects.
A Different Kind of Lender
Make no mistake about it. Upstart CEO Dave Girouard is on a mission, and technology-challenged lenders had better watch out. "Lending is the center beam of revenue and profits in financial services, and artificial intelligence may be the most transformational change to come to this industry in its 5,000-year history," Girouard declared.
That's quite a statement, but it's not without merit. If you've ever experienced the frustrations of the traditional lending system, then Girouard's clarion call should resonate.
The CEO wants people to consider "AI-led disruption" as "targeting dramatic inefficiency in one of the largest segments of our economy."
In a time when fairness in lending is a real problem, Girouard and Upstart would claim that technology is the solution. That's why Upstart doesn't rely on credit-score-based lending models.
Instead, the company's platform uses machine learning to more accurately identify borrower risk. Consequently, Upstart should be able to reduce lending risk while approving more applicants, and thereby provide access to affordable credit.
Upstart Partnering to Better Serve Clients
What Girouard and Upstart are doing is certainly disruptive, and could prove to be transformative. Yet, it's important for the company to gain a sense of legitimacy among the financial community.
To help achieve this, Upstart has established a number of partnerships with banks and credit unions.
With one collaboration after another, Upstart is firming up its own reputation while also serving more clients (the dates shown are of the press releases, not necessarily the formation of the partnerships):
- Oct. 27, 2021: Four Corners Community Bank selected Upstart as a lending partner.
- Nov. 17: Credit union BCU chose Upstart to help facilitate personal loans.
- Dec. 8: First National Bank of Omaha expanded its partnership with Upstart to "scale its personal loan program nationwide."
- Dec. 9: The National Bankers Association partnered with Upstart to "improve access to affordable credit for customers of minority-owned depository institutions."
- Jan. 12, 2022: AgFed Credit Union started a collaboration with Upstart to provide personal loans.
- Jan. 26: Corning Credit Union tapped Upstart to help to offer more personal loans through the power of AI.
With each new value-added collaboration, Upstart is cementing its status as a credible lending-tech platform. That's bad news for stodgy, old lenders and great news for Upstart.
Clearly, Girouard and Upstart aren't afraid to overturn a broken lending system.
At the same time, Upstart is expanding its presence through a series of strategic partnerships. Thus, the movement toward better, AI-driven lending is growing quickly.
Today, adventurous investors can participate in this movement through a position in UPST stock. It's a bold bet, but it could pay off big-time.
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.
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