Is Upstart Stock a Buy, Sell, or Hold At Its New 52-Week Low?
Key Points
Shares of Upstart have been sinking since the middle of last year, largely on economic concerns.
This company’s businesses, however, appear stronger than any economic headwinds.
Once the worry surrounding this stock lifts, there’s room and reason to expect higher highs.
- 10 stocks we like better than Upstart ›
It's been a lousy year for shareholders of artificial intelligence (AI)-powered credit bureau Upstart (NASDAQ: UPST). After teasing a bounce back early last year, the stock's now down more than 70% from last July's peak and has recently reached a new 52-week low.
On the one hand, the stock looks scary. On the other hand, it's tempting. What should investors do?
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Unfortunately, this is one of a handful of high-profile AI stocks that attract much speculation, both bullish and bearish. If you can't afford to suffer a sizable setback, your best move is to steer clear of the stock from either side of the table.
If you can stomach the risk and understand why other investors might appreciate the company's potential, though, know this: Its second-quarter revenue was up 42% year over year, and full-year top-line guidance of $1.4 billion is 40% above 2025's reported revenue of $1.0 billion. It's a sign that all of Upstart's different profit centers -- originations, credit checks, and platform fees -- are gaining momentum.
So why the persistent weakness in the stock since the middle of last year, and for that matter, since 2021, shortly after its initial public offering?
Timing has much to do with it. Upstart went public at a time when investors were willing to pay a premium to participate in splashy IPOs. As time marched on, however, that willingness to maintain those premium valuations withered. Investors still aren't entirely sure exactly what UPST is arguably worth, and they're erring on the side of caution. And, maybe that's the right move.
The company's plainly profitable, though, and increasingly so. That's more than half the battle for a start-up. From here, it just needs to continue improving on the results it's already proven it can produce.
Analysts are on board, too, by the way. Their consensus price target of $39.24 is 70% above the ticker's present price. It just needs the right nudge to get the bullish ball rolling.
Should you buy stock in Upstart right now?
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Upstart. The Motley Fool has a disclosure policy.
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