Upstart $UPST Stock Up 27% On Massive $400 Million Buyback

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UPST stock exploded more than 27% higher on February 15, 2022, after the company announced a massive $400 million share buyback.

Upstart Announces $400 Million Share Repurchase Program

Upstart Holdings, Inc. (NASDAQ: UPST), a leading artificial intelligence (AI) lending platform, today announced that its Board of Directors has approved a share repurchase program with authorization to purchase up to $400 million of common stock.

“With the volatility in the trading of our stock, we have seen what we believe to be attractive buying conditions at various times over the past year, and our profitability puts us in a position to be able to initiate this program and take advantage of those situations on behalf of our shareholders,” said Sanjay Datta, CFO of Upstart.

Upstart may repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The actual timing and amount of future repurchases are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. The share repurchase program does not obligate Upstart to acquire any particular amount of common stock, and the program may be suspended or terminated at any time by Upstart at any time at its discretion without prior notice.

Upstart is a leading AI lending platform partnering with banks and credit unions to expand access to affordable credit. By leveraging Upstart’s AI platform, Upstart-powered banks and credit unions can have higher approval rates and lower loss rates for every race, ethnicity, age, and gender, while simultaneously delivering the exceptional digital-first lending experience their customers demand. More than two-thirds of Upstart loans are approved instantly and are fully automated. Upstart was founded by ex-Googlers in 2012 and is based in San Mateo, California and Columbus, Ohio.

Upstart Announces Fourth Quarter and Full Year 2021 Results

Upstart Holdings, Inc. (NASDAQ: UPST), a leading artificial intelligence (AI) lending platform, today announced financial results for its fourth quarter and full fiscal year 2021 ended December 31, 2021. Upstart will host a conference call and webcast at 1:30 p.m. Pacific Time today. An earnings presentation and link to the webcast are available at ir.upstart.com. Separately, on February 14, 2022, the board of directors authorized Upstart to repurchase $400 million of its common stock.

“With triple-digit growth and record profits, Q4 was an exceptional finish to a breakout year for Upstart. 2021 will be remembered as the year AI lending came to the forefront, kicking off the most impactful transformation of credit in decades,” said Dave Girouard co-founder and CEO of Upstart. “But AI lending isn’t a one-category phenomenon. I’m also happy to report that, with help from an epic push by our team in the last few weeks of the year, auto loan originations on our platform are now ramping quickly and will provide growth opportunities to Upstart for years to come.”

Fourth Quarter 2021 Financial Highlights

Revenue. Total revenue was $305 million, an increase of 252% from the fourth quarter of 2020. Total fee revenue was $287 million, an increase of 240% year-over-year.
Transaction Volume and Conversion Rate. Bank partners originated 495,205 loans, totaling $4.1 billion, across our platform in the fourth quarter, up 301% from the same quarter of the prior year. Conversion on rate requests was 24% in the fourth quarter of 2021, up from 17% in the same quarter of the prior year.
Income from Operations. Income from operations was $60.4 million, up from $10.4 million the prior year.
Net Income and EPS. GAAP net income was $58.9 million, up from $1.0 million in the fourth quarter of 2020. Adjusted net income was $87.0 million, up from $5.4 million in the same quarter of the prior year. Accordingly, GAAP diluted earnings per share was $0.61, and diluted adjusted earnings per share was $0.89 based on the weighted-average common shares outstanding during the period.
Contribution Profit. Contribution profit was $149.5 million, up 261% from in the fourth quarter of 2020, with a contribution margin of 52% compared to a 49% contribution margin in the same quarter of the prior year.
Adjusted EBITDA. Adjusted EBITDA was $91.0 million, up from $15.5 million in the same quarter of the prior year. The fourth quarter 2021 adjusted EBITDA margin was 30% of total revenue, up from 18% in the fourth quarter of 2020.

Full Year 2021 Financial Highlights

Revenue. Total revenue was $849 million, an increase of 264% from 2020. Total fee revenue was $801 million, an increase of 251% year-over-year.
Transaction Volume and Conversion Rate. Bank partners originated 1.3 million loans, totaling $11.8 billion, across our platform in 2021, up 338% from the prior year. Conversion on rate requests was 24% 2021, up from 15% in the prior year.
Income from Operations. Income from operations was $141 million, up from $11.8 million the prior year.
Net Income and EPS. GAAP net income was $135 million, up from $6.0 million in 2020. Adjusted net income was $224 million, up from $17.5 million in the prior year. Accordingly, GAAP diluted earnings per share was $1.43, and diluted adjusted earnings per share was $2.37 based on the weighted-average common shares outstanding during the period.
Contribution Profit. Contribution profit was $398 million, up 279% from 2020, with a contribution margin of 50% compared to a 46% contribution margin in the prior year.
Adjusted EBITDA. Adjusted EBITDA was $232 million, up from $31.5 million in the prior year. Full year 2021 adjusted EBITDA margin was 27% of total revenue, up from 13% in 2020.

Financial Outlook

For the first quarter of 2022, Upstart expects:

Revenue of $295 to $305 million
Contribution Margin of approximately 46%
Net Income of $18 to $22 million
Adjusted Net Income of $50 to $52 million
Adjusted EBITDA of $56 to $58 million
Basic Weighted-Average Share Count of approximately 84.3 million shares
Diluted Weighted-Average Share Count of approximately 95.9 million shares

For the full year 2022, Upstart expects:

Revenue of approximately $1.4 billion
Contribution Margin of approximately 45%
Adjusted EBITDA of approximately 17%
Auto Transaction Volume of approximately $1.5 billion

Upstart has not reconciled the forward-looking non-GAAP measures above to comparable forward-looking GAAP measures because of the potential variability and uncertainty of incurring these costs and expenses in the future. Accordingly, a reconciliation is not available without unreasonable effort.

📺 Upstart (UPST) | $400M BUYBACK!! | VALUE Stock???

Upstart (UPST) | $400M BUYBACK!! | VALUE Stock???

📉 UPST Stock Technical Analysis

Upst Stock

Both the long and short term trends are negative. It is usually better to avoid buying stocks with negative trends. UPST is an average performer in the Consumer Finance industry, it outperforms 48% of 54 stocks in the same industry. UPST is currently trading in the lower part of its 52 week range, which is not a good signal considering that the S&P500 Index is trading in the middle of its 52 week range.

There is a support zone ranging from 108.93 to 109.10. This zone is formed by a combination of multiple trend lines in multiple time frames. There is also a support zone ranging from 101.11 to 103.04. This zone is formed by a combination of multiple trend lines and important moving averages in the daily time frame. Finally, there is a support zone ranging from 96.04 to 96.33. This zone is formed by a combination of multiple trend lines in multiple time frames.

There is resistance at 117.33 from a horizontal line in the daily time frame.

Although the technical rating is bad, UPST does present a nice setup opportunity. UPST stock has a Setup Rating of 6 out of 10. Prices have been consolidating lately and the volatility has been reduced. There is very little resistance above the current price.

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