It has been a difficult year for artificial intelligence-powered lending platform Upstart Holdings (UPST -2.18%). The softening macroeconomic situation in the U.S. has resulted in declining revenue and net losses, a huge reversal from the company's monster success in 2021. As a result, shares are down a whopping 90% in 2022. 

Despite Upstart's troubles, is it possible this fintech stock rises 100% over the next 12 months to reach $30? Let's take a closer look at how likely (or unlikely) this price target is. 

It's all about the macro 

Even though Upstart touts itself as simply a platform that facilitates loan originations for its partner base of 83 combined banks and credit unions and 702 auto dealership locations, collecting a fee in doing so, it's strikingly clear the company is sensitive to the whims of the economy. In 2021, shares skyrocketed more than 850% between the start of the year to mid-October thanks to loans originated, sales, and profit that jumped 338%, 264%, and 2,150%, respectively, compared with the prior year. These are ridiculous gains. 

The deteriorating economy that has characterized 2022, however, has been a drag on Upstart's business. In the most recent quarter (Q3 2022, ended Sept. 30), revenue declined 31.1% year over year. And the company posted an operating loss of $58.1 million in the same time period. Upstart is also starting to see loan losses increase compared with prior expectations. 

This makes complete sense. As the Federal Reserve raises interest rates, as it has done aggressively this year, borrowing costs across the economy go up. And this discourages people from wanting to take out loans to pay for things, especially personal loans and auto loans, areas Upstart specializes in. The opposite is true when interest rates are lower and credit flows more freely throughout the economy. 

Trying to predict the direction the economy is headed, especially over such a short time frame of one year, is impossible to do. And because Upstart's business model is tied so closely to the state of the economy, this makes forecasting its financials a difficult task. 

The good news is that this business has true disruptive potential. Its lending platform can originate loans with higher approval rates and lower loss rates compared with the traditional Fair Isaac FICO credit model. Upstart's model has also approved a larger number of minority borrowers at better interest rates. This is all a net positive for society, in my opinion. 

But even though Upstart is definitely in a slump right now, this doesn't mean the company is dead. A robust economic backdrop is all that's needed to turn things around. Unfortunately, we can't say for certain when this favorable situation might happen again. 

An unlikely scenario 

To try to figure out whether a $30 target is in the cards, we can look at Wall Street analyst estimates to at least get a sense of the consensus view. They estimate that for 2023, Upstart will post earnings per share of $0.17. So if the stock were to hit $30 in one year, the price-to-earnings ratio would be an eye-watering 176. 

Many financial experts and economists are predicting that a recession will happen sometime next year, and that would obviously be a major headwind for Upstart. But even if the U.S. avoids an economic downturn, it's probably not likely we will experience an extremely supportive macro environment like what we had in much of 2021. 

Once it is done raising interest rates, the Federal Reserve will probably keep them steady at an elevated level next year, at least much higher than they were in 2021. And that means Upstart won't put up the monster numbers in 2023 that it did in 2021. 

As a result, a $30 target, which was a price Upstart was last at in August, seems unlikely over the next 12 months. But for those who believe in the long-term prospects of the company and think the stock looks too cheap to ignore, now might be the best time to be a buyer, as shares are down 90% in 2022.