Upstart Holdings (UPST -0.60%) stock surged more than 13% Monday as investors rushed back to the AI-based lending platform operator after months of selling their shares. But are they right to be so optimistic about this tech stock? Indeed they are.
While there wasn't any company-specific news that caused Upstart's share price to soar, investors are getting excited again about its long-term prospects. And there's plenty of data to support their enthusiasm. Consider these statistics from the company's most recent quarterly financial report, which it released on Feb. 15:
- Total revenue skyrocketed 252% from the year-ago quarter to $305 million.
- Upstart's banking partners originated $4.1 billion in loans on the platform -- up 301%.
- GAAP income spiked to $58.9 million, up from just $1 million in the year-ago quarter.
While these results were reported a couple of weeks ago, Monday's share price jump likely suggests that some investors who have been skeptical are now diving in.
Additionally, the company is expecting more growth in the first quarter of 2022.
Upstart's management says that revenue in the current quarter will be between $295 million and $305 million, and they expect net income to be in the $18 million to $22 million range. That means that the company's first-quarter revenue and earnings could increase 148% and 100%, respectively, year over year, at the midpoint of guidance.
That should help clarify why investors are right to be optimistic about Upstart's future.
But for all the skeptics out there, consider one more bit of information: Upstart's management says that with its new automotive lending opportunities, the company now has a total addressable market of $635 billion.
So to recap: Upstart is increasing sales and net income at a rapid pace, it issued strong guidance for the current quarter, and it's just beginning to tap into a massive market that it could benefit from for years to come.
Yep, I'd say investors are smart to see the long-term potential of this growth stock as it attempts to use its AI-powered platform to transform the lending industry.