Sign InUPST Stock Soars 5.39% with High Trading Volume, Potential Headwinds Ahead
Summary
As of July 31, 2023, Upstart Holdings, Inc. experienced a significant increase in stock price, reaching a 52-week high, but with a negative EPS, short-term investors should be cautious, while long-term investors may consider holding due to the bullish undertone and potential for revenue growth from a new home loan product.
Introduction and Recap
Upstart Holdings, Inc. (Ticker: UPST), a member of NASDAQ exchange, saw a significant increase in its recent stock price as of its closure on July 31, 2023. Its last closing price was $68.69, a rise of $3.51 (5.39%) from its previous close. The trading volume for the day was 12.21 million shares, above its average volume of 11.36 million shares.
The UPST stock price displayed a range between $65.1 and $68.92, with the latter also marking its 52-week high. The stock also reached a yearly low of $11.93. As of the last closure, the company's market capitalization stood at $5.68 billion.
Fundamental Analysis
In terms of earnings per share (EPS), UPST reported a negative value of $-3.82, indicating the company is not currently profitable. This resulted in a negative PE ratio of -17.98. As for discounted cash flow (DCF), a vital indicator in assessing the stock’s intrinsic value, UPST's DCF stood at $73.79, slightly higher than its closing price. Despite this, the bearish EPS suggests more room for improvements in terms of profitability.
UPST's total shares outstanding are 82.67 million. The company is scheduled to announce its next earnings report on 08/08/2023. Analyst forecasts display a wide variance, with high and low target prices projected at $180 and $10 respectively, consensus target price being $40.89 and median target price $20.5.
Technical Analysis
The relative strength index (RSI 14) shows a value of 77 – an indicator that the stock is currently in an overbought condition, which may pose a risk for potential investors considering entry. This aligns with UPST's impressive run of 391% rally as noted in recent news, possibly linked to more risk of pullbacks.
The 50-day moving average of $37.97 and 200-day moving average of $22.55 reflect a strong upward momentum for UPST. The stock has recently outperformed these averages, signalling bullish trends. The three-month MACD stands at 8.54, further driving home the positive price momentum narrative.
Recent News and Events
Pertaining to UPST’s news, several noteworthy developments may impact the future stock performance. For instance, UPST has formed new partnerships although the commitments of these partnerships remain unclear. Potentially, this could lead to some investor uncertainty.
Secondly, one of the reasons for UPST's impressive rally is a stock upgrade by a Wall Street analyst. Moreover, the artificial intelligence (AI) powered lending platform has received a price target upgrade to $72 per share from BTIG.
Finally, the company battles through a high-interest rate environment, grappling with sales declines and losses alike. However, they plan on unveiling a new home loan product soon that may capture a major share in its largest market.
Prediction and Final Evaluation
Considering the current overbought condition and the rather weak earnings per share, UPST stock might encounter some headwinds in the short term, which may include a slight pullback from its current high levels. However, the stock appears to benefit from strong upward momentum, depicted by its moving averages, and if the home loan product is well-received, it could provide a substantial boost to its revenue and stocks.
For the next trading day on August 01, 2023, given the prevailing momentum, the stock is expected to trade in the range of its last closing price of $68.69 and DCF value of $73.79.
For the upcoming week, it’s advised to keep an eye on their earnings announcement as positive reports could lead to a further increase, especially given the analysts' high target of $180. However, given the current RSI and the potential risk of a pullback, caution is advised for short-term traders.
In sum, while the path to profitability remains under question, the strong market sentiment and expectations around new product launches place UPST as a potential 'Hold' for long-term investors due to the overall bullish undertone it has portrayed. However, due to its RSI being overbought and having a negative EPS, short-term investors should exercise caution until the company's profitability improves, making it a 'Sell' for them. A more definitive assessment could be drawn once the upcoming earnings report and its effects are fully manifested.
