UPST Stock Analysis: Mixed Indicators Suggest Hold for Long-Term and Buy for Short-Term Investors

Introduction

Upstart Holdings, Inc. (Ticker: UPST) is a technology company listed on NASDAQ that uses artificial intelligence to revolutionize the credit lending industry. In this report, we provide a comprehensive fundamental and technical analysis of UPST's current stock performance.

Fundamental Analysis

On the fundamental front, UPST's financial profile shows it continues to be in a loss-making position, with a negative Earnings Per Share (EPS) of -$3.18. This equates to a negative Price-to-Earnings (PE) ratio of -19.81, indicating that the company is not profitable at the moment but investors are betting on its future success. Negative PE ratios can often be observed in rapidly growing, yet still unprofitable, technology companies.

The market capitalization stands at around $5.21 billion with 82.67 million shares outstanding. In the context of discounted cash flow (DCF), Upstart is slightly overvalued with its last closing price of $62.99 as compared to the DCF value of $68.09. This could be a potential caution for investors considering an immediate Buy position without further due diligence.

Upcoming earnings announcement on August 8, 2023, would be a crucial date for investors to note. The announcement could significantly swing the stock price, either positively or negatively, based on the revealed financials and future outlook.

From the news snippets, although Upstart has struggled with sales declines and losses due to the high-interest environment, it will soon roll out a new home loan product. One analyst has also predicted that Upstart could outperform the estimates in the upcoming earnings.

Technical Analysis

In terms of technical analysis, UPST showed a strong bullish move with the price jumping up 17.43% or $9.35, closing at $62.99. The stock recorded a volume of 24.32 million shares against an average volume of 10.66 million shares, suggesting the stock's uptick was backed by substantial volume thereby implying strong market interest.

The stock's Relative Strength Index (RSI14) of 80, a momentum oscillator, is in the overbought category suggesting that the stock might face a potential price correction in the near term. The Moving Average Convergence Divergence (MACD) of 5.66 shows positive price momentum. Furthermore, the company's last closing price is well above both its 50-day ($34.40) and 200-day ($21.72) moving averages indicating strong bullish sentiment.

On another note, the stock saw a range between a low of $54.71 and a high of $65.98, with the year high also being $65.98 revealing the stock is trading at its peak level over the year. This, combined with the RSI, might signal the stock could face a correction.

Stock Predictions

The next trading day might see a slight correction due to the heightened RSI levels. However, in the upcoming week, there might be bullish growth due to high investor interest, positive momentum, and the market's anticipation toward the upcoming earnings announcement. Also, note that there are mixed signals from analyst target prices ranging from $10 to $180 with a median of $20.5 and consensus of $40.89.

Evaluation and Recommendation

In conclusion, given the mixed fundamental indicators, we see UPST as a 'Hold' for long-term investors due to its future growth potential and a 'Buy' for short-term investors due to the positive momentum and anticipation towards the earnings announcement. However, investors should be cautious about the potential correction due to overbought conditions and the company's negative earnings per share. At the same time, the upcoming home loan product launch could potentially boost the company's revenues and profitability in the long run.