Is Upstart Holdings Stock A Good Investment?

Upstart Holdings (UPST) was incorporated in 2012 by former Google executive David Girouard. The company became a publicly-traded company in December 2020 with a market cap of around $2 billion. Shares of Upstart soared last week after the company released its Q4 2020 earnings report, which exceeded the expectations of investors and analysts. Upstart stock ios up over 200%, and has appreciated over 80% in March driven by the earnings beat and strong guidance by the management.

Upstart’s Quarterly Report Stuns Investors

The company is designed as an Artificial Intelligence platform that improves access to affordable credit and aims to reduce risks and costs associated with Upstart’s credit lending banking partners. This allows clients to experience higher approval rates and lower loss rates. Currently, Upstart is offering loans with 3 – 5-year loan terms. The company uses non-traditional variables such as education and employment to determine creditworthiness when providing personal loans.

In the most recent quarterly report, adjusted earnings of the company fell to $0.07 per share from $0.10 a year ago. The revenue the company generated in the last quarter of 2020 was 39% higher in comparison to the corresponding quarter previous year, and the lending volume grew 57% YoY. The financial hardships many individuals were confronted with last year due to the global pandemic had driven up the demand for loans, and Upstart seems to have benefited from this macroeconomic development.

After a downwardly revised increase in consumer credit occurred from September – December last year, the consumer credit industry declined again in the U.S. in January 2021 by $1.3 billion. Based on the statistics, consumer credit in the U.S. is projected to decline by $18.72 billion by the end of Q1 of 2021.

A Sneak Peek into Upstart’s Upcoming Venture

The company is committed to increasing its market share in the industry, progressing conversion rates, increasing credit requests, expanding banking partnerships, and launching new products and services. Upstart also has plans to launch its existing digital lending platform in the Spanish language within the U.S., which could lead to an increased engagement from the Spanish-speaking community residing in the United States, especially Latin Americans.

A week ago, the company announced that it would acquire Prodigy Software to expand its lending services to auto loans allowing individuals to gain an online shopping experience of automobile purchases. Commenting on this deal, Upstart CEO Dave Girouard said:

“While Amazon and Shopify have modernized the online shopping experience, the auto industry has been left behind. Upstart is on a path to reduce the cost of auto financing, and we can accelerate this opportunity with a modern multi-channel purchase experience. Auto retail is among the largest buy-now-pay-later opportunities, and together with Prodigy, we aim to help dealers create a seamless and inclusive experience worthy of 2021.”

The acquisition is expected to be completed in the second quarter of 2021.


Upstart has a unique business model that focuses on the credit industry, and the company is a newcomer to the Nasdaq. The company seems to be headed in the right direction in creating shareholder wealth, and the management team has the necessary expertise to transform Upstart into a very profitable venture.

Disclosure: The author does not own any shares mentioned in this article.

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Sulakshi Madawala

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