Is Upstart a Buy?
To buy Upstart Holdings (NASDAQ: UPST) stock or not to buy? That has to be the question of the year for some investors. The artificial intelligence-powered credit company rocked the investing world when it exploded onto the markets last year, gaining nearly 1,000% from its first-day closing price at the end of 2020 through October 2021. Since then it's posted a spectacular decline, losing roughly 94% of its value. It now trades at a mere 14 times trailing 12-month earnings. Should the newly humbled stock make it onto your buy list? Let's examine it.
Upstart offers a fresh take on credit assessment. It says that four out of five Americans have never defaulted on a loan, but don't have access to good credit because they fail credit evaluation criteria from old-fashioned assessment tools such as Fair Isaac's FICO tool, which takes a very narrow view of creditworthiness.
Upstart is trying to change that by using machine learning and evaluating many other criteria to determine creditworthiness. It claims that banks using its platform have 75% fewer defaults at the same approval rates. Its simple-to-use and simple-to-integrate model takes away many pain points for banks and customers, with 74% of applicants approved instantly.
Source Fool.com
