Fintech lending disruptor Upstart (UPST +4.55%) has risen more than tenfold since its IPO just nine months ago. In this Fool Live video clip, recorded on Aug. 19 (a day Upstart was down significantly), Fool.com contributors Matt Frankel, CFP, Jon Quast, and Brian Feroldi discuss how investors should deal with volatility in Upstart and other high-growth companies.
Brian Feroldi: Do you know why Upstart is down and Netflix (NFLX +0.64%) is up?
Matt Frankel: Well, I can tell you Upstart has been on fire lately. Upstart went public in December; their shares are up tenfold since December. They went public at that $20 IPO price. Even after today's pullback, shares are over $200. They are up something like 90% in the past month. I think I did Upstart on the show last week, actually.
Feroldi: Yes.
Frankel: Upstart pretty much blew earnings expectations out of the water in any possible number you could look at. Whether it comes to the current quarter's revenue, earnings, loan growth, future guidance, anything was just way above what the market was expecting. I think it's getting hit this morning because the entire market is in a pullback right now. Generally, when that happens, you see the highest-growth, highest-performing stocks get it the worst. I don't really think it's anything more than that. It's still up well over 80% in the past month. Even after that, analysts were starting upgrading Upstart like crazy last week. Two days ago, they announced that they've raised $400 million in new convertible debt, that they're paying 0.25% interest on. The conversion price is something like $280. Fantastic cost of capital to grow their business. If you could borrow money at 0.25% and put it to work, do it. I think it's just a correction after a massive run-up and nothing more. I can't really speak to Netflix. I don't know if either of you can.
Feroldi: I'm looking around. The only thing I'm seeing is that the SEC is charging three former software engineers with insider trading. Doesn't seem to really be a reason for the stock to be up this morning. But in dollar terms, it's up $22, which sounds a lot, but it's up 4%.
Frankel: The only thing I could really think of is if the delta surge is what's causing the market to go down, Netflix is like the stay-at-home stock. If you think that's going to be worse than expected, then maybe that's why it's getting the bump. I don't know.
Jon Quast: It's like what we talked about all the time. Day by day, is it going to be up or is it going to be down? It's really a coin flip. Who knows what people are going to be thinking tomorrow. Tomorrow people might be optimistic, and thing next you know, Netflix is down 4% because everyone's getting back outside. The narratives change so fast. I think that really when we look at it today, who knows. But looking at it over the next year, why was Upstart up this year? That's a lot easier to talk about in more concrete terms.
Frankel: I would agree with that.
