Upstart's share price surge today shows that lots of investors are bullish on the company right now, but are they right to be so optimistic? Yes, they are, and here's why.
First of all, Upstart's revenue increase was phenomenal. Fourth-quarter sales were up 252% from the year-ago quarter and revenue for the full year was up 264%. These revenue growth percentages are exactly what you want to see from a young, high-growth company.
Even more impressive than its sales growth is the fact that this tech company is also profitable. The company's net income in 2021 under generally accepted accounting principles (GAAP) was $135 million -- a huge jump from its $6 million in net income in 2020.
Upstart's co-founder and CEO Dave Girouard said in a press release that "With triple-digit growth and record profits, Q4 was an exceptional finish to a breakout year for Upstart."
I'd say so.
For investors who are feeling like they've missed on the company's growth, and its subsequent share price gains, consider this: Upstart's management issued some impressive guidance as well.
For the first quarter of 2022, management thinks sales will be $300 million and net income will reach $20 million, both at the midpoint of guidance. That would represent a 148% increase in sales and a 100% spike in earnings compared to the year-ago quarter.
Clearly, Upstart's management doesn't think the company is finished growing just yet. And investors would be wise to agree.
Upstart just began tapping into the massive $635 billion auto lending market toward the end of last year. It's by far the company's largest opportunity and it's just getting started. So the fantastic results Upstart just reported hardly take into account what could be a huge growth driver for the company in the coming years.
Add the company's fantastic revenue growth, profits, and auto lending opportunity all together and it becomes crystal clear that investors have the potential to see fantastic results from Upstart over the long term.