Stock Market Analysis

Should Investors Worry About Upstart’s Recent 200%?

Up almost 200% in 3 days, is Upstart just another ‘short-squeeze’ or is there justification behind its rapid growth?

It’s easy to look at massive gains in a short space of time and end up buying at the top, but it’s just as easy to be suspicious of such moves and miss out. 

Is Upstart’s (NASDAQ: UPST) recent run a case of the former or the latter?

Just getting (up)started?

Shares in the financial software vendor closed at a record $164.87 yesterday, marking a 171% jump in just 3 sessions. In fact, since going public in December with a valuation of $2.1 billion, it has gone from strength to strength and is now valued at $12 billion. Many are looking at this recent performance and thinking: 

“Is this GameStop all over again?”

After all, there have been whispers about Upstart on the r/WallStreetBets message board on Reddit. 

Such an assumption could be premature though, as Upstart is enjoying a deserved purple patch right now following an impressive first-ever quarterly earnings call last Wednesday:

  • Revenue: $84.4 million (+39% year-over-year (YoY))
  • Operating income: $10.4 million (~+300% YoY)
  • Adj. EBITDA: +123% YoY
  • Q1 ’21 revenue guidance: $112 million to $118 million (+80%) 

These numbers aside, the real game-changer for Upstart is its acquisition of Prodigy Software, a provider of cloud-based automotive retail software. The almost half-a-trillion-dollar U.S. automotive industry is suffering from a serious lack of buy-now-pay-later opportunities. Through its Prodigy acquisition, Upstart suddenly has a chance to become a leading player in the lucrative space. 

So, before you dismiss Upstart as just another stock caught in ‘the squeeze’ (or before buying solely because you believe it to be a quick buck), you should take a look at its fundamentals and the growth potential for its auto financing business.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here

Jamie Adams
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.