This Stock Has Been a 10-Bagger in Less Than a Year -- and Could Still Be a Buy

Lending technology company Upstart (UPST 2.10%) has been one of the best-performing stocks in recent memory, rising from its $20 IPO price in December to more than $320 as I'm writing this. However, the performance of the business clearly justifies the move, and if things go well with the auto lending expansion, there could be more upside potential ahead, as Fool.com contributors Matt Frankel, CFP, and Jason Hall discuss in this Fool Live video clip, recorded on Sept. 20. 

Matt Frankel: Upstart is not the first company to try to do what it does. Upstart tries to make access to credit better for people who have been traditionally underserved by the system. There have been a lot of companies who are going to revolutionize how we do credit, no one has done as well as Upstart has. Jason first we talked about this. But real quick Upstart, just they do a great job of doing a better job of predicting risk, predicting who's going to default on loans. They get lower default rates by something like 75% for their customers. They provided a system for banks to loan money, and they can make it better than FICO, which is the gold standard. With that, I'll let Jason talk about it.

Jason Hall: Now, that's the key. How many times have we heard the story about the tech heads that decided to get into some other business because they were smarter and they can do something then it fails miserably? Upstart in this case is the ideas that there's better data, there are better data points out there than this stuff that's Fair Isaac and these others use to identify credit risk. They're pointing to the fact that there are millions of people in the United States alone, that are essentially outside of the modern banking credit system.

The way that we normally do things and build a credit history, and that nobody is really putting any focus on actually trying to evaluate accurately what is the true credit risk of these individuals. Number one, there's an equity issue. So you're excluding a massive number of people from credit access. You're charging them a premium even though they're not necessarily a higher credit risk, and it creates an enormous opportunity for the business that can crack that code to make a ton of money. Guys, I will say this. It seems like they're doing it because, you know what's happening? They're originating these loans, and they are selling them. Banks are buying them.

That says there's something there. If financial institutions that are looking to own yield instruments are willing to buy these things that says something right there. The rates of growth are pretty incredible. I think one thing that we've talked about a lot that's always worth mentioning is close to a year ago now, I think it was November last year, maybe early December, made an acquisition in the auto industry, which really opened the door for them to get into that business because they haven't been auto-lending at all, and if you think about name a more predatory lending environments than they used car industry, for example, it's very predatory.

Breaking that barrier I think is really powerful and it's generated a lot of growth. I think two-and-a-half quarters into it, it's really looks like it's working. I like this business a tremendous amount.