Upstart Holdings is on fire! Q2 earnings crushed expectations, and Q3 looks even brighter!

On August 6, 2024, Upstart Holdings’ stock surged due to the company’s better-than-expected second-quarter financial results and robust guidance for the third quarter. Key drivers included a smaller-than-anticipated quarterly loss of $0.17 per share, beating the analyst estimate by 56.41%, and revenue of $128 million, surpassing expectations. Loan originations reached 143,900, totaling $1.1 billion, with a 15% conversion rate. For the third quarter, Upstart projected revenue of $150 million and an improved adjusted EBITDAUnderstanding Adjusted EBITDA: A Comprehensive Guide In the world of finance and business valuation, financial metrics play a crucial role in assessing a company's health, performa... More of -$5 million. Advances in their AI model, revitalized funding supply, and increased operating efficiency were highlighted by CEO Dave Girouard, enhancing investor confidence and driving the stock price up.

Better-Than-Expected Q2 Financial Results

Earnings Beat Expectations

Upstart Holdings reported a quarterly loss of $0.17 per share, a significant improvement over the analyst consensus estimate of a $0.39 loss. This 56.41% beat on expectations marks a substantial positive surprise for investors, reflecting the company’s enhanced financial health and operational efficiency.

Revenue Exceeds Estimates

The company recorded revenue of $128 million, surpassing the analyst estimate of $124.54 million by 2.78%. This revenue growth highlights Upstart’s robust business model and its ability to generate higher-than-anticipated income in a competitive market environment.

Loan Originations Show Strong Growth

Upstart originated 143,900 loans totaling $1.1 billion in the second quarter. This impressive volume represents a conversion rate on rate requests of 15%, a significant increase from 9% in the same quarter of the previous year. The rise in loan originations underscores the growing demand for Upstart’s AI-driven lending platform.

Strong Q3 Guidance

Revenue Projections Exceed Expectations

For the third quarter, Upstart projects revenue of approximately $150 million, which is notably higher than the $124.5 million estimate. This optimistic outlook suggests continued growth momentum and the potential for further positive financial performance.

Improved Adjusted EBITDA Forecast

The company has also projected a Q3 adjusted EBITDA of -$5 million, showing improvement from -$9.3 million in Q2 and surpassing the Visible Alpha consensus of -$12.2 million. This improved EBITDA forecast reflects Upstart’s effective cost management and operational enhancements.

Operational Improvements

Advances in AI Model

CEO Dave Girouard emphasized the significant advances in their AI model, which have played a crucial role in the company’s improved performance. The enhancements in AI capabilities are likely driving better loan approval rates and customer satisfaction.

Insights:

1. Upstart’s financial performance exceeded market expectations significantly.
2. Strong guidance for Q3 indicates continued positive momentum.
3. AI model improvements are a key factor in operational success.
4. Enhanced funding supply and efficiency boost investor confidence.

Essence (80/20):

• Core Topics:
  • Financial Performance: Upstart’s Q2 results significantly beat expectations, reducing losses and surpassing revenue estimates.
  • Loan Originations: Substantial growth in loan originations with a notable increase in the conversion rate.
  • Future Guidance: Positive revenue and EBITDA projections for Q3, suggesting ongoing improvement.
  • Technological Advancements: Advances in AI models contributing to operational efficiency and performance.
  • Investor Confidence: Strong financial results and optimistic future guidance leading to increased stock value.

The Guerilla Stock Trading Action Plan:

1. Monitor Financial Reports: Regularly review Upstart’s quarterly financial statementsFinancial statements are the primary tool used by investors to evaluate a company's financial health. They are an important part of a company's reporting, providing a snapshot of i... More and guidance updates.
2. Analyze Loan Origination Trends: Track the number of loans originated and conversion rates to gauge business growth.
3. Evaluate AI Developments: Stay informed about advancements in Upstart’s AI model and its impact on performance.
4. Assess Funding and Efficiency: Watch for updates on funding supply and operational efficiency improvements.

Blind Spot: Potential regulatory changes in the financial technology sector could impact Upstart’s operations and growth. Monitoring regulatory updates is crucial.

UPST Technical Analysis (Daily)

The chart for Upstart Holdings Inc. (UPST) shows the following key elements:

Price Trends: The stock has experienced a volatile movement with a recent downtrend. The price is currently below both the 50-day moving average (25.83) and the 200-day moving average (28.84), indicating a bearish trend.

Support and Resistance Levels: Immediate support is observed around the recent low of 23.22. Resistance is seen near the recent high of 29.28 and the 200-day moving average at 28.84.

Volume: The trading volume shows significant spikes during price drops, suggesting strong selling pressure. The volume on the last trading day was 356,123, which is slightly below average.

Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI): The RSI is currently at 42.55, indicating the stock is neither overbought nor oversold. However, it is closer to the oversold region, suggesting a potential buying opportunity if the trend reverses.

On Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV): The OBV is showing a downward trend, confirming the selling pressure in the stock. This suggests that the recent price movements are backed by volume, reinforcing the bearish outlook.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More: The Stochastic RSI is at 0.013, indicating the stock is in the oversold territory. This can be a precursor to a potential reversal if buying pressure increases.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More: The Chaikin Oscillator is at -4,297,309, indicating strong selling pressure. This aligns with the bearish trend seen in other indicators.

MACDThe MACD indicator is essentially a momentum indicator that shows the relationship between two different moving averages of price. The MACD is the difference between the 12-period ... More Oscillator: The MACD line is below the signal line with a reading of -0.27, while the histogram shows negative momentum at -1.68. This indicates a bearish signal in the near term.

Time-Frame Signals:

• 3 Months: Sell. The overall trend and technical indicators suggest continued bearish momentum in the short term.
• 6 Months: Hold. Potential for reversal if the stock finds support and oversold indicators trigger buying interest.
• 12 Months: Buy. Long-term potential remains as the stock could recover from oversold conditions and potentially break above moving averages.

Overall, the current technical analysis points to a bearish trend with potential for a reversal in the longer term. Investors should monitor support levels and volume changes for signs of a trend reversal.

UPST Technical Analysis (Weekly)

The chart for Upstart Holdings Inc. (UPST) on the weekly time frame shows the following key elements:

Price Trends: The stock has experienced a significant decline from its highs, followed by a prolonged downtrend. It has recently been trading sideways, suggesting consolidation. The price is currently well below the Anchored VWAP (31.77), indicating a bearish trend.

Support and Resistance Levels: Immediate support is observed around 20.60, the recent low. Resistance is seen near 29.28, the recent high, and the Anchored VWAP at 31.77.

Volume: The trading volume shows periodic spikes, with a recent high volume on the downtrend, indicating strong selling pressure. The latest weekly volume was 4,243,511.

On Balance Volume (OBV): The OBV is currently at 32,464,511, showing a decline from previous highs. This indicates that the recent price movements are accompanied by decreasing volume, which confirms the bearish sentiment.

Time-Frame Signals:

• 1 Year: Sell. The overall trend and technical indicators suggest continued bearish momentum in the short term.
• 2 Years: Hold. Potential for stabilization if the stock finds a solid support level and oversold conditions lead to a reversal.
• 3 Years: Buy. Long-term potential remains as the stock could recover from oversold conditions and possibly break above key resistance levels.

Past performance is not an indication of future results. This article should not be considered as investment advice. Always conduct your own research and consider consulting with a financial advisor before making any investment decisions. 🧡

Enhanced Funding Supply and Efficiency

Upstart has witnessed a revitalized funding supply and increased operating efficiency. These operational improvements have not only supported the company’s positive outlook but have also contributed to investor confidence and the subsequent rise in stock price.

The combination of these positive developments has led to a substantial increase in Upstart Holdings’ stock price on August 6, 2024. The company’s ability to outperform financial expectations and provide strong future guidance has reinforced its position as a leader in AI-driven lending solutions. Investors are optimistic about Upstart’s growth trajectory and its potential to continue delivering strong financial results.