I Wouldn't Buy Upstart Stock While This Warning Sign Is Flashing
Upstart (NASDAQ: UPST) drew lots of investor attention early on for its efforts to upend the way borrowers take out loans. Its AI-powered lending platform targeted an industry that some would argue is in need of a change. The positive attention it got early on led to some rapid growth and helped drive share prices up 857% from the start of 2021 to their all-time high price in October of that year.
But since hitting that peak, this fintech stock has cratered roughly 94% and the business is working through some challenges. While some investors might view the beaten-down shares as a solid long-term opportunity, I won't consider buying Upstart stock until there's some serious improvement in this one key factor. Let me explain.
The biggest warning sign I've seen with Upstart is that the business is much too vulnerable to the cyclicalities of the broader economy. Shareholders who bought the stock when it hit the public markets in December 2020 likely thought Upstart would perform more like a technology business than a traditional bank.
Source Fool.com
