Upstart Holdings Posts 340% Earnings Growth In Q1: Shares Jump 3%

Upstart Holdings (UPST) rose as much as 3% on May 12 after the artificial intelligence (AI) lending platform announced strong earnings growth in its first quarter.

The company’s adjusted earnings of $0.22 per share beat the consensus estimates of $0.15 per share and ballooned 340% year-over-year. Total revenue of $121.3 million surpassed the Street’s estimates of $116.1 million and grew 90% from the year-ago period.

Bank partners originated 169,750 loans worth $1.73 billion across the company’s platform in Q1, up 102% year-over-year. The conversion rate was 22% on rate requests, up 14% year-over-year. (See Upstart Holdings stock analysis on TipRanks)

Upstart CEO Dave Girouard said, “Upstart is delivering a combination of growth and profits that is rare in FinTech and in the technology industry overall.”

Girouard further added, “The advantages of AI in lending are becoming more apparent by the day and Upstart is synonymous with this newly emerging category.”

For Q2, Upstart Holdings projects total revenue to land between $150 million and $160 million, higher than the consensus estimates of $117.13 million.

For 2021, the company increased its revenue expectations to approximately $600 million versus the prior guidance of $500 million. The consensus estimate is pegged at $503.18 million.

Following the Q1 results, JMP Securities analyst Ronald Josey increased the stock’s price target to $149 (62.3% upside potential) from $111 and maintained a Buy rating.

Josey commented, “With conversion rates expanding 480bps Q/Q to 22% and management raising 2021 revenue guidance by 20% following revenue and EBITDA coming in 3% and 37% above the high-end of guidance, Upstart’s marketplace is clearly gaining traction among users and its bank partners.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 4 Buys versus 2 Holds. The average analyst price target of $123.50 implies 34.5% upside potential to current levels. Shares have increased 211.6% over the past six months.

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