Sign InUpstart Holdings Inc. (UPST) Shows Volatility and Decline, Analysis Suggests 'Hold'
Summary
Upstart Holdings, Inc. (UPST) has experienced significant price fluctuation and a recent sell-off due to unfavorable earnings, leading to a recommendation of Hold based on unsatisfactory quarterly results and negative EPS.
Stock Analysis: Upstart Holdings, Inc. (UPST)
Fundamental Analysis
Upstart Holdings, Inc., trading under the ticker UPST on the NASDAQ, has a market cap of $2.88 billion. It is noteworthy that the firm's year-low was $11.93 while the year-high was marked at $72.58, a significant price fluctuation. As of its last trading day on August 14, 2023, the closing price was $34.82, a change of $1.32 or 3.94% from the previous close. This dynamic fluctuation may indicate market volatility.
The company experienced volume of 11.37 million shares, slightly below the average volume of 12.36 million shares. This reduction in volume trading could be indicative of reduced investor interest or a temporary slowdown in trading activity.
Upstart's Earnings Per Share (EPS) stands at -$3.82 with a negative Price to Earnings (PE) ratio of -9.12 indicating the company is currently not profitable.
Moreover, the company's recent earnings announcement revealed issues that sparked a sell-off, leading to a 45% plummet in its stock during the week of the announcement. The following guidance provided for the next quarter was reportedly worse than expected, reflecting a challenging macro environment which continues to put pressure on Upstart.
Technical Analysis
The Relative Strength Index (RSI14) value of 28 suggests that the stock is currently in oversold territory. This could be seen as a potential buy signal as it may indicate an undervalued condition.
The stock price is currently below the 50-day moving average which is $43.81 and above the 200-day moving average of $24.15. The negative trend is further emphasized by the Moving Average Convergence Divergence (MACD) of 7.26 which shows an upward price tendency in recent months.
With an Average True Range (ATR) at 17.74, suggesting a high level of stock price volatility, the current support and resistance levels are at $34.03 and $36.97 respectively.
The discounted cash flow (DCF) calculation, which estimates the value of an investment based on its future cash flows, stands at around $39.92.
Target Price, Recommendations and Consensus
Analysts' median target price for UPST is $20.5, with a high estimate of $180 and a low estimate of $10. The consensus recommendation is categorized as a "Hold" with 3 analysts suggesting "Buy", 6 suggesting "Hold" and 2 suggesting "Sell".
Predicting the Stock Price
Given recent news, analysts' consensus, and both fundamental and technical analysis, it is predicted that the trading price for the next day, August 15, 2023, will carry on the current downwards trend.
For the upcoming week, unless positive news comes forth, the price might test the support level of $34.03 but overall, will hold around the current price range, owing to the existing technical and fundamental indicators.
Evaluation of the Stock
Taking into account the unsatisfactory quarterly results, the negative EPS, the ongoing challenging macro environment, and the sell-off sparked post earnings announcement, the recommendation on Upstart stock is a Hold.
Despite the stock being in the oversold zone and a potential for undervaluation, the negative financial performance and future earnings expectations demand a cautious approach. A buy recommendation could be considered when profitability is improved and more stable market conditions are restored.
