Shares of the artificial intelligence (AI) lender Upstart (UPST 20.96%) had surged nearly 40% this week as of market close Thursday after the company reported superb earnings results for the fourth quarter of 2021.
Upstart reported adjusted earnings per share of $0.89 on total revenue of $305 million, easily beating analyst estimates. The company originated nearly $4.1 billion of loans in the quarter, a nearly $1 billion increase from the prior quarter. In tandem with earnings, Upstart also announced a $400 million share repurchase program.
Then Upstart provided revenue guidance of $1.4 billion for this year, which exceeded previous projections from analysts. The company also seems to be ramping up its auto-lending division and expects to originate $1.5 billion of auto loan volume this year.
CEO Dave Girouard issued a statement saying: "With triple-digit growth and record profits, Q4 was an exceptional finish to a breakout year for Upstart. 2021 will be remembered as the year AI lending came to the forefront, kicking off the most impactful transformation of credit in decades."
While Upstart did have a strong fourth quarter, I do have some concerns about the company as we head into a much different monetary environment and one where credit quality might not be so benign, as the Federal Reserve increases its benchmark overnight lending rate.
But it also gives the fintech company a chance to go through a real rate cycle and fully prove its concept, which so far has put up some really solid results.