Start-up inventory rises on strong revenue forecasts and buy-back plans

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surged early Wednesday after the artificial intelligence lending firm reported fourth-quarter results that shattered Wall Street estimates and it issued an outlook ahead of consensus expectations.

Upstart (ticker: UPST) also announced that it would buy back $400 million of its stock.

Upstart shares rose 25.6% in premarket trading on Wednesday to $137.03. As of Tuesday’s close, the stock was down 27.9% in 2022.

Upstart said it expects first-quarter revenue of $295 million to $305 million and adjusted Ebitda (earnings before interest, tax, depreciation and amortization) of $56 million to $58 million. Analysts polled by FactSet had expected revenue of $258.3 million and adjusted Ebitda of $53 million.

The company said it expects revenue of $1.4 billion for the year versus expectations of $1.2 billion.

Upstart reported fourth-quarter adjusted earnings of 89 cents per share, well above a forecast of 51 cents. Revenue for the quarter was $304.8 million, higher than prior year revenue of $86.7 million and above analyst estimates of $262.9 million.

Dave Girouard, co-founder and CEO of Upstart, said in a statement that 2021 “will be remembered as the year AI lending came to the fore, kicking off the transformation of the most impactful credit in decades.

“But AI lending is not a one-category phenomenon. I’m also pleased to report that with the help of an epic push from our team over the last few weeks of the year, auto loan originations on our platform are now increasing rapidly and will provide growth opportunities for Upstart. for the coming years.

Analysts at Jefferies, who price the stock at Hold with a price target of $100, said Upstart’s earnings beat company estimates. “Loan counts, conversion rates and margins appear positive relative to expectations, and guidance factors are likely sufficiently above consensus for the stock to react positively,” the analysts wrote in a note.

Analysts at Citi, which has a buy rating on Upstart shares, said the company’s “beast mode” quarter defied normalization concerns.

“In addition to the continued momentum of gaining market share in personal loans, we believe there is much more to come on the automotive ramp (banking partners, rooftop growth)…the story of the Momentum appears to be well intact,” Citi said in a research note. Citi has a price target on the stock of $350.

Regarding the buyout, Chief Financial Officer Sanjay Datta said: “With the volatility in our stock trading, 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 these situations on behalf of our shareholders.

Write to Joe Woelfel at joseph.woelfel@barrons.com