Upstart Stock (NASDAQ:UPST)
On Wednesday, Upstart Holdings (NASDAQ:UPST) stock jumped by 30% in noon trading after the AI-powered lending platform reported first-quarter profitability that was above expectations, provided an optimistic forecast for the second quarter, and closed on more than $2 billion in financing agreements.
During an earnings call, CFO Sanjay Datta claimed that these deals, “along with others in the pipeline,” will provide the firm with a “stronger and more resilient capital supply” in the future quarters.
The funding boost for Upstart is welcome news. The Upstart stock price fell when Q3 numbers were released because the firm would use its own cash until it could get committed finance.
According to a note from Barclays analysts Ramsey El-Assal and John Coffey dated Tuesday night, the extra capital should “start to lift originations,” albeit there may be some repercussions on margins from the new financial arrangements.
Upstart (NASDAQ:UPST) CEO Vineet Datta indicated on a recent conference call that the company’s fundraising arrangements would enable it to provide “modest preferential economics.” For example, he mentioned the possibility of risk-sharing and discounting on a smaller scale.
Analysts anticipated that Upstart stock price would surge after the release of better-than-expected first-quarter earnings. (Recently, short interest was 37%.)
El-Assal and Coffey noted that pricing power contributed to UPST’s marginal revenue beat ($103M vs an expectation of $100M). A rise of 160 bps from Q4 2022 to Q1 2019 was seen in the take rate.
Management projects that the company’s contribution margin will hit 60% in Q2 after reaching a record high of 58% in Q1.
In addition, the Barclay analysts noted that Upstart’s Q1 EBITDA margin surpassed the Street expectation of -46% due to cost reduction.
Management mentioned a 30% decrease in staff on the results call. It has also found methods to sublease some unused office space and cut its annual expenditures for its technological infrastructure by as much as $10 million.
Featured Image: Megapixl @ Rafaelhenriquepress
Author Shariq Khan 
