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Why is UPST up 5% today?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

Upstart Holdings Inc.’s shares are on the rise, trading up by 7.84 percent on Wednesday. The notable uplift follows encouraging quarterly earnings and a strategic new partnership, which have garnered positive public sentiment. This newfound investor confidence is propelling Upstart’s stock higher, underscoring the market’s favorable response to the company’s growth and strategic initiatives.

Key Highlights:

  • Fibre Federal Credit Union has announced a new partnership with Upstart to provide personal loans to new and existing members.
  • Upstart Holdings, Inc. (NASDAQ: UPST) upsized its convertible senior note offering to $375M due to strong investor demand.
  • Mizuho raised the price target on Upstart to $48 from $33 and maintained an ‘Outperform’ rating, driven by better valuations and lower interest rates.
  • Upstart Holdings’ private placement of $375M of 2% convertible senior notes due 2029 led to pre-market trading gains.

Candlestick Chart

Live Update at 11:18:33 EST: On Wednesday, September 25, 2024 Upstart Holdings Inc. stock [NASDAQ: UPST] is trending up by 7.84%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Overview of Recent Financial Performance

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Upstart Holdings, Inc. (UPST) has experienced a boost, reflecting a notable rise of 5%, hitting $40.59 in recent trading sessions. This surge can be attributed to multiple strategic moves and positive news coverage. The financial landscape of UPST appears to be evolving rapidly.

Reviewing the recent earnings report, Upstart generated a total revenue of about $127.63M for Q2 2024, with a net income loss of $54.47M. Key ratios reveal some poignant truths about the company’s positioning. The return on assets (ROA) stands at a negative 6%, while the return on equity (ROE) is critically low at -32.73%. Such figures imply immediate areas needing attention but also underline the expansive moves the company is undertaking.

When you eyeball the stock’s behavior these past days, the oscillation between lows and highs stands out. For instance, from Sep 18 to Sep 25, the highest stock value was $41.7 and the lowest $36.14. Intraday movements further capture the erratic yet promising activity. In the narrow window of 10:45 AM to 11:00 AM on 24 Sep 2024, UPST exhibited brisk trading, fluctuating between $41.06 and $41.17. These bursts signify volatile enthusiasm possibly due to multiple bullish announcements.

Examining the financial statements more closely, a considerable figure crops up: total liabilities amount to over $1.22B, creating a leverage ratio (total debt to equity) strikingly above average at 3.1. These numbers paint a picture of a company leveraging heavily to remain competitive. Still, it is aggressively capitalizing on growth opportunities.

Fibres Federal Credit Union Partnership: Catalyzing UPST’s Growth

One of the factors driving UPST’s recent ascent is the announcement of a partnership with Fibre Federal Credit Union. This collaboration leverages Upstart’s AI-driven lending platform to offer personal loans to its members. In financial circles, this move is like fusing two power circuits to light a whole city block. By enabling the credit union to offer more accessible loans, Upstart stands to expand both its clientele and its market presence.

This AI-driven approach isn’t just a technical enhancement but a strategic masterstroke. It aligns well with Upstart’s core mission of increasing borrowing access while mitigating risk via smarter algorithms. The market sentiment around this partnership is overwhelmingly positive, as it strengthens Upstart’s positioning in a highly competitive field.

More Breaking News

Convertible Senior Notes Offering: Strong Investor Sentiment

In a powerful demonstration of market confidence, Upstart Holdings upsized its previously announced $300M convertible senior note offering to $375M. Convertible senior notes, which can be transformed into common stock, indicate that investors believe in the company’s future upside. Think of it as buying a fancy new car: you’re splurging because you expect it to serve you well for years.

This financial maneuver is designed to fortify the company’s balance sheet and fund strategic initiatives. By repurchasing portions of its existing convertible senior notes due 2026, Upstart aims to manage debt maturities effectively, possibly reducing financial strain down the line.

It’s not every day investors swoon over a convertible note offering, but Upstart’s stock saw pre-market gains off the back of this announcement. The market reaction speaks volumes about investor confidence and the company’s aggressive yet calculated financial strategies.

Upgrades and Price Targets: Mizuho M boosts Confidence in UPST

Brokerage firm Mizuho lifted its price target for Upstart from $33 to $48 while maintaining an ‘Outperform’ rating. This boost in target price is akin to someone being handed the keys to a dream car – exhilarating and loaded with possibilities. Their optimism is rooted in improved market valuations and lower interest rates, which generally bode well for loan-centric business models like Upstart’s.

Lower interest rates can turn the tables in Upstart’s favor, reducing borrowing costs and potentially increasing demand for personal loans. Curiously, Mizuho’s price target hike coincides with enhanced risk appetites among investors, making it less intimidating to invest in a high-volatility asset.

Quick Overview of Upstart Holdings’ Financial Outcomes: An Insightful Peek

To truly grasp the financial health of Upstart Holdings, you don’t need a magnifying glass; a comprehensive glance suffices. In Q2 of 2024, Upstart showcased total assets of approximately $1.82B and shareholders’ equity of around $594.71M. However, mounting debt and cost concerns continue to loom large.

Cash flow from operating activities remained positive at $65.295M, fueled primarily by changes in the working capital and significant proceeds from debt issuance. However, free cash flow stood at $62.967M hinting at a relatively pressurized fiscal environment.

What does this mean for potential investors? The company appears to be teetering between strategic expansion and cautious liquidity management. A bullish investor might see the expanding revenue and partnerships as harbingers of future growth.

Impact of News: What’s Driving the 5% Jump in UPST’s Stock?

The tangible rise in UPST’s stock price isn’t just from whims of market forces; it’s fueled by solid news. Let’s connect the dots:

  1. Fibre Federal Credit Union Partnership: A promising venture that integrates Upstart’s technology with an established financial institution. This partnership isn’t just another deal but an endorsement of Upstart’s AI-driven loan assessments. Markets swiftly interpreted this as an assurance of ongoing and expanding operations, leading to a spike in stock value.

  2. Convertible Senior Note Offering: The upsizing of the note offering underscored strong demand from institutional investors, signaling their long-term confidence in Upstart. When big players back such moves, public investors often follow suit, thereby inflating the stock price.

  3. Mizuho’s Price Target Increase: Perhaps the most direct and immediate catalyst, the raised price target re-energized investor sentiment. Broker notes often act like fuel to an impatient trader’s fire, spreading optimism and drawing more buyers into the fray.

Conclusion: The Road Ahead for Upstart Holdings Inc.

In the labyrinth-like world of stock markets, sentiments are akin to a tap dance, always shifting steps. Upstart Holdings is dancing on an optimistic note, buoyed by promising alliances, strategic financial shifts, and encouraging analyst reviews.

The Fibre Federal Credit Union partnership is a feather in Upstart’s cap, likely to drive customer acquisitions and revenue growth. Meanwhile, the upsized convertible note offering backs the company’s ambitious future projects, reflecting robust investor trust. With brokerage firms like Mizuho betting big, the road ahead seems flush with potential, albeit peppered with the usual market uncertainties.

In this intricate market waltz, whether UPST will continue its upward climb or face unforeseen stumbles, only time will tell. Until then, stakeholders are likely to watch closely and navigate through these promising yet turbulent waters.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”