Why Upstart climbed 38.1% in September


What happened

Actions of Reached (NASDAQ: UPST) jumped 38.1% in September, according to data provided by S&P Global Market Intelligence.

The increase means that the shares of the artificial intelligence-based lending platform have grown more than sevenfold since the start of the year.

Image source: Getty Images.

So what

Upstart has had an impressive growth streak over the past two years as it expanded its business to help banks make more loans. Its proprietary AI-powered lending model helps connect borrowers to banks and increase access to credit for a wide range of consumers. For its second quarter of fiscal 2021, the number of loans approved reached 287,000, down from just 41,000 two years ago. The conversion rate, measured as the number of loans negotiated as a proportion of applications received, peaked at 24%, down from just 11% eight quarters ago. The volume of transactions also more than quintupled, from $ 486 million to $ 2.8 billion during the same period.

This increased activity has done wonders for Upstart’s financial figures. For the quarter, the company reported a 14-fold increase in revenue to $ 187.3 million while reporting net income of $ 37.3 million, reversing a loss of $ 6.2 million incurred during the quarter. from the same period last year. Operating and free cash flow also turned positive for the first six months of the year.

Now what

The company remains optimistic for the remainder of 2021 and predicts revenue could reach around $ 750 million, more than triple the $ 228.6 million it earned last year. She recently signed the Water and Power Community Credit Union as a partner to provide better access to loans to her clients. WSFS Bank (NASDAQ: WSFS) also launched its own digital personal loans platform powered by Upstart to make it easier for its customers to access credit products.

Currently, 71% of Upstart loans are fully automated, down from just 29% four years ago, illustrating how easily clients can get their loans approved. The company has significant room for growth with a total addressable market of $ 84 billion in the personal loan origination business.

Recently, Upstart also expanded its auto refinancing business from 33 to 47 states, covering 95% of the US population. This sector of activity is gaining ground with the increase in the footprint of its dealers and the signing of five banking partners for car loans. If this venture is successful, it will dramatically increase Upstart’s total addressable market to $ 635 billion, more than seven times its original opportunity.

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