- Upstart Holdings Inc. (UPST) stock soared 30% to $87.32 after Q4 2024 earnings beat expectations, reporting an EPS of $0.26 and revenue up 56% to $218.96 million, driven by a 68% increase in loan originations and a conversion rate rise to 19.3%.
- The company neared GAAP profitability with an adjusted EBITDA of $38.8 million and an 18% margin, while Piper Sandler raised its price target to $105, eyeing $1 billion in FY25 revenue amid optimism for Q1 2025, despite a slight decline in contribution margin from 63% to 61%.
- Seeing high options interest in UPST Weekly Feb 14 $80 puts, with 3,500 contracts traded against an open interest of 160, as stock surges 29%, pushing implied volatility to 99%.
Upstart Holdings Inc. (UPST) witnessed its stock price leap by 30% to $87.32 in midday trading on Wednesday after unveiling its Q4 2024 earnings, which dramatically outstripped market expectations. The company delivered an adjusted earnings per share of $0.26, reversing from a $0.11 loss last year, with revenue skyrocketing 56% to $218.96 million, well above the predicted $181.92 million. This was driven by an unprecedented number of loans originated — 245,663 loans amounting to $2.1 billion, a 68% year-over-year growth — and a conversion rate boosted to 19.3% from 11.6%, showcasing the effectiveness of Upstart’s AI in lending.
CEO Dave Girouard underscored the company’s near-GAAP profitability, with adjusted EBITDA climbing to $38.8 million from just $0.62 million last year, achieving an 18% adjusted EBITDA margin. Despite this progress, Upstart reported a GAAP net loss of $2.8 million, which was significantly better than the $42.4 million loss from the year before. The company’s outlook for Q1 2025 anticipates revenue at $200 million and adjusted EBITDA at $27 million, reflecting confidence in ongoing growth and profitability.
The stock’s volatility is amplified by its limited 78.72 million float and substantial 18 million short interest, potentially setting the stage for a short squeeze, explaining the rapid stock price increase. Meanwhile, the options market shows unusual activity with UPST Weekly Feb 14 $80 puts gaining interest; with the stock up 29%, 3,500 contracts have traded against an open interest of just 160, pushing implied volatility to 99%.
Adding to the positive sentiment, Piper Sandler has raised its price target on Upstart by $20 to $105 from $85, maintaining an ‘Overweight’ rating. The firm highlights that Upstart not only surpassed already high Q4 expectations but also aims for a $1 billion revenue target for FY25.
As the stock tests the $90 level and with an upcoming AI Day event on May 14 in New York City, Upstart is clearly signaling its commitment to further advance its AI technology in the lending sector. However, a minor decrease in contribution margin from 63% to 61% could suggest some underlying challenges, possibly from pricing competition or escalating operational costs. If Upstart can keep its growth momentum and effectively leverage its AI capabilities, there’s potential for more upside in 2025.
Update: Upstart Holdings Inc. (UPST) initially reported a diluted adjusted net income per share of $0.26 and 116,330,130 diluted weighted-average common shares outstanding for Q4 2024. However, in a recent 8-K/A filing, the company corrected these figures to $0.29 per share and 103,118,327 shares, respectively.
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