3 Reasons to Buy Upstart Holdings, and 1 Reason to Sell
Artificial intelligence (AI) lending platform Upstart Holdings (NASDAQ: UPST) went public in late 2020 and became a sensation, soaring roughly 20 times its initial public offering price in one year. The stock trades below that price today, and shares are down 95% from their high.
This is a battleground stock, with valid arguments for why the company could fail or succeed over the long term. Rising interest rates have poured water on Upstart's business model, which is admittedly fragile today. But there are reasons for hope. Here are three reasons to buy the stock and one factor that still threatens Upstart's future.
The premise of Upstart's business is simple: It believes that its algorithms can better determine creditworthiness than Fair Isaac's FICO credit-scoring system, which lenders have used for decades. Borrowers apply for loans -- either directly through Upstart.com or through partners that rebrand its software (known as "white labeling") -- then the loans are typically sold to investors.
Source Fool.com
