UPST - Upstart: Get In Before Rates Come Down
2024-02-19 03:52:45 ET
Summary
- Upstart's shares dropped 20% despite beating expectations for Q4 earnings, due to its revenue forecast for Q1'24.
- The company's fundamentals are stabilizing, and the start-up could benefit from increased loan demand in a low-interest environment.
- UPST's key metrics like conversions and percentage of fully automated loans improved Q/Q.
- Shares have revaluation potential once the Federal Reserve ends its tightening policy (which I expect for the second half of FY 2024).
Upstart's (UPST) shares crashed 20% after the Fintech start-up presented results for the fourth quarter that beat expectations on both the top and bottom lines. The AI start-up's revenue forecast for Q1'24 was perceived as weak, however, as it came in below consensus estimates. Since Upstart is a rate-sensitive credit play for investors and the Federal Reserve announced that it is going to cut benchmark interest rates in FY 2024, the start-up could be set for accelerating loan demand this year. Key performance metrics are also improving and I believe investors may want to consider buying Upstart before the Federal Reserve starts to lower rates. Shares of Upstart are trading below the 1-year average P/S ratio and have rebound potential, in my opinion....
Upstart: Get In Before Rates Come Down