2023-05-08 14:03:37 ET
Markets have likely priced in the risks surrounding the cloud-based AI lending platform Upstart's ( NASDAQ: UPST ) Q1 earnings results, scheduled for Tuesday, May 9th, after market close.
The stock lost 84.61% value in the last 1 year, but year-to-date, returns are a positive 6.32%. In the last 5 days, the stock has gained 12.55%. UPST was trading +3.29% at $13.68 Monday afternoon ahead of the earnings release.
Upstart Q4 results exceeded Wall Street consensus estimates, yet the company issued a Q1 revenue guidance weaker than the consensus.
The company's share prices surged the next day despite the weak guidance and Citibank analyst Peter Christiansen's downgrade to Sell. Christiansen acknowledged that the company may be overly cautious in its outlook, but also said that tight financial conditions make it difficult to find funding for the platform's loans. Also, there are little indications that it's likely to improve soon.
For Q1, the consensus EPS estimate is -$0.81 (-232.8% Y/Y) and the consensus revenue estimate is $99.75M (-67.8% Y/Y).
Over the last 2 years, UPST has beaten EPS and revenue estimates 75% of the time.
Over the last 3 months, EPS estimates have seen 0 upward revisions and 8 downward revisions. Revenue estimates have seen 0 upward revisions and 7 downward revisions.
Upstart has seen defaults increase, institutional demand for its riskier unsecured consumer loans wane and losses on the company's held-for-investment portfolio swell, according to J.P. Morgan analyst Reginald Smith.
However, Smith also said that they like the longer-term potential of the company's AI lending platform, even though the business is proving to be extremely cyclical and sensitive to the whims of its funding partners.
Meanwhile, the estimated short interest in Upstart marked a five-month low of 33.6% two weeks ago, but has since tracked higher, The Short Interest Report from The Fly news showed.
The headwinds the company has faced recently are now nearing their end, Seeking Alpha author Sunil Shah said . Shah gives the stock a Strong Buy rating, while the other authors give the stock a Hold rating.
The sell-side analysts give the stock a Hold rating on average, with an average price target of $11.29.
The Quant Rating system gives the stock a Strong Sell rating, saying the company has P/E Non-GAAP ( FWD ) of 48.85, while the Financials sector median is 11.33.
More on Upstart:
Upstart: Time To Brace For Impact
Upstart: Stuck In The Middle Of Nowhere
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Markets have likely priced in risks surrounding Upstart's Q1 earnings