Shares of Upstart (UPST) have experienced a significant surge this year, nearly quadrupling in value. However, they have receded by 87% from their all-time high of $390 in October 2021. Despite this correction, Upstart has attracted attention due to its focus on artificial intelligence and recent improvements to its business. As the company prepares to release its earnings report, there is anticipation for potential positive surprises.
Analyst Lance Jessurun from BTIG suggests that Upstart has made progress in overcoming its challenges and is on track for growth and profitability. The company has formed funding partnerships and implemented changes to its underwriting model, which have affected its perception in the market. Jessurun believes that short-sellers may have already adjusted their positions, considering strong third-party web-traffic-data indications.
Here are the key details to watch for in Upstart’s upcoming earnings report, expected after Tuesday’s closing bell:
Analysts surveyed by FactSet project an adjusted loss of 7 cents per share, compared to earnings of 1 cent per share in the same quarter last year.
The FactSet consensus estimates revenue at $135.2 million, a decrease from $228.2 million recorded in the previous year.
Stay tuned for the official announcement and analysis of Upstart’s financial performance.
Upstart shares have a history of experiencing significant fluctuations after earnings announcements. Since going public, the company has released 10 reports, with nine of them resulting in a double-digit percentage swing in the next trading session. Notably, Upstart shares have seen gains after each of the last two reports, contributing to a remarkable increase of 284% so far this year.
What Else to Watch For
One factor that Jefferies analyst John Hecht will closely monitor is the company’s delinquency trends. He notes that the delinquency rates in Upstart’s near-prime unsecured lending sector appear to have stabilized in recent months. Hecht believes that with this stabilization, loss rates should also stabilize and potentially decrease going forward.
Focus on AI Commentary
During Upstart’s call, there will likely be significant attention on their use of artificial intelligence (AI) in their lending decisions. However, JMP Securities analyst David Scharf and his team have not found any unique differentiation in Upstart’s underwriting performance or their technology compared to other established digital lenders they have followed for over a decade.
Momentum in Car-Loan Business
Scharf is interested in signs of momentum in Upstart’s car-loan business. Currently, he does not believe the company has made significant progress in terms of auto purchase loan volumes. The automobile sector is crucial for Upstart, as the unsecured personal market in the U.S. is not a particularly large asset class. Therefore, successfully penetrating other loan types is essential for Upstart to achieve and sustain long-term growth based on their current valuation.
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