In a year of historically wild stock movements, often driven by chats on Reddit boards, financial software retailer Upstart Holdings is the latest company to see its stock go up to unexplained heights .
Founded in 2012 by Google CEO David Girouard, Upstart went public in December and was valued at $ 2.1 billion after its first market visit. After a 171% jump in the last three trading sessions, the company is now worth more than $ 12 billion.
The Upstart rally, which includes a 32% jump Monday to close at $ 164.87, reminds us of stocks like GameStop and AMC, which came up in January, inspired by the r / WallStreetBets message board on Reddit and tons of buying purchases on Robinhood and other consumer apps.
There have been some posts about Upstart on the WallStreetBets forum, including one saying “let’s go to the moon” in the subject line. But they were taken away by content regulators, which happens for a variety of reasons, “including keeping communities safe, civilized, and true to their purpose,” according to Reddit.
However, unlike companies promoted by Reddit, Upstart was inspired by some of the positive news. After the market closed Wednesday, Upstart reported fourth-quarter revenue growth of 39% from a year earlier to $ 84.4 million and said operating income was nearly three times that of $ 10.4 million. Upstart was forecasting first-quarter revenue of $ 112 million to $ 118 million, an increase of about 80% at mid-range.
Upstart stock rally
CNBC
It was a broad blow, but fewer than five analysts cover the company, according to Refinitiv, so comparisons to estimates aren’t particularly reliable. Regarding the impending acceleration in the first quarter, finance chief Sanjay Datta said in the job call that the industry is “catching up where we would expect if the impact of the outbreak were not clear- ever been there. “
Upstart uses machine learning to decrypt customer loans and lends its technology to banking partners, who use it for more targeted subscriptions. The company said its revenue had risen in the quarter since nearly 124,000 loans. Some of the demand went down last year due to the financial hardship of Covid-19.
Analysts at Barclays, in an attempt to keep up with the recent market reversal, raised their share price target on Friday to $ 110 from $ 58, a 90% increase. However, that was lower than the closing price of $ 115.09 from the previous day. Therefore, the auditors maintained their recommendation to hold on to the stock.
“We expect rapid growth to continue as the company moves into new vertical and distribution devices, but valuation keeps us at an angle as we await a more attractive entry point, “wrote the Barclays analysts.
The stock is now trading for more than 50 times 2020 income.
Upstart is not the first public company to start in the months following their first market. Palantir, a data analytics software provider for large intelligence agencies and companies, went public through direct listing in September at $ 10 a share and started firing up a month or two later, reaching a high of $ 39. in January. The stock has fallen back to $ 24.22 at the end of Monday.
Upstart did not immediately respond to a request for comment.
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