What happened
Shares of Upstart Holdings (UPST +3.67%) are down nearly 50% over the last 12 months, but the returns over that time frame were a whole lot worse last week. That's because the stock of the artificial intelligence (AI) lending-marketplace company has soared this week. As of Thursday afternoon, Upstart shares have shot 48% higher since last Friday's close, according to data provided by S&P Global Market Intelligence. The stock is trading at a seven-month high, up almost 80% so far in 2023.
NASDAQ: UPST
Key Data Points
So what
The stock has tumbled over the last year as an economic backdrop of rising interest rates and slowing growth turned all the data used to build the company's AI lending platform on its head. But investor sentiment began to change last week when Upstart announced its first-quarter results. The company said revenue dropped 67% year over year, but there was better news looking ahead.
Upstart projected sequential revenue growth in the second quarter, but there was more surprising, and important, positive news. CEO Dave Girouard stated, "Despite the headwinds facing our industry, we secured multiple long-term funding agreements, together expected to deliver more than $2 billion to the Upstart platform over the next 12 months."
This week's stock performance was the result of the first details released related to that funding.
Now what
On Monday, it was revealed that Upstart and investment management company Castlelake reached a purchase agreement for Castlelake to acquire as much as $4 billion of consumer installment loans from Upstart.
In less than one week, Upstart's already significant funding prediction was easily reached and surpassed. And considering that the company specifically noted there were "multiple" funding agreements being worked on, it is reasonable to believe there will be more to come.
At least one company insider seems to think more good things lie ahead, too. Director Kerry Cooper announced a purchase of 2,000 shares in a filing this week. Those shares were acquired at a price just below $20 per share after the stock had already run up from last week's earnings report. The stock has continued to push higher from there this week.
If the company's algorithms now prove to be superior to traditional lending metrics in the current economic environment, investors might find that the stock could be a good investment even after the shares have spiked this week.
