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Why Upstart and ShotSpotter Bucked the Nasdaq's Downtrend

By Dan Caplinger – May 12, 2021 at 12:12PM

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Positive results have investors excited about these two companies.

Wall Street showed no signs of getting calmer on Wednesday morning, with the Nasdaq Composite (^IXIC) again taking the brunt of a bearish move that sent the index down more than 1.5% as of 11:15 a.m. EDT. Inflationary pressures are becoming more evident than ever in the economy, and many investors fear that rising prices could force monetary policy changes that would endanger the financial environment that has created so many opportunities for big investment gains.

Yet even on a somewhat gloomy day for the Nasdaq, a few growth-oriented stocks still managed to shine. Upstart Holdings (UPST -6.54%) and ShotSpotter (SSTI -0.89%) are in very different businesses, but both benefited from financial performances that impressed their respective shareholders. Below, we'll take a closer look at these winners to see if there's more in the tank to fuel future gains.

Start it up

Shares of Upstart Holdings were higher by 7% on Wednesday morning after having been up 29% at the open. The disruptive credit services and information company reported first-quarter financial results that showed its potential to keep growing well into the future.

Paper marked loan application with cash, a pen, and a calculator.

Image source: Getty Images.

Upstart's backward-looking results were sensational. Sales jumped 90% from year-ago levels on a 71% rise in fee-related revenue. Upstart's banking partners originated nearly 170,000 loans totaling $1.73 billion, which was more than double what the company saw in the same period last year. Adjusted net income was almost six times higher year over year.

Upstart projects that further gains are likely in the near future. Revenue in the second quarter should climb to between $150 million and $160 million, with the company expecting a total of roughly $600 million in revenue for the full year. That's a full $100 million higher than Upstart had previously predicted, and the company sees itself keeping positive margin performance for the foreseeable future.

Upstart stock has taken investors on a roller-coaster ride since February, with the stock climbing as high as $165 per share before losing half its value recently. Shares will likely remain volatile, but Upstart is showing the popularity of its platform at a critical time.

More growth for ShotSpotter

Elsewhere, shares of ShotSpotter were higher by 24%. The provider of law enforcement technology services reported first-quarter results that investors took positively.

Revenue at ShotSpotter was up 44% compared to the first quarter of 2020, with adjusted net income rising more than 18 times what the company earned in the year-earlier period. The company reported greater demand for its ShotSpotter Respond service suite, launching in six new cities and expanding services in five other cities that are already current customers.

Moreover, ShotSpotter expects its success to continue. The company boosted its revenue guidance for the full year slightly, with its new projections representing a top-line growth rate of more than 30%. ShotSpotter has also signed a number of agreements to provide its ShotSpotter Connect services to law enforcement officials later this year.

ShotSpotter is a small company, but its gunshot detection, case management, and forensic services businesses are getting a lot of attention from prospective customers. Investors increasingly see the potential for ShotSpotter to grow considerably within a short period of time.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Upstart Holdings, Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Upstart Holdings, Inc. Stock Quote
Upstart Holdings, Inc.
$21.00 (-6.54%) $-1.47
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,051.64 (%)
ShotSpotter Stock Quote
$27.73 (-0.89%) $0.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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