Upstart Holdings (UPST) is scheduled to release its first-quarter earnings results after the market closes today, May 6. Investors are focused on whether the artificial intelligence-powered lending platform can maintain recent momentum despite challenging conditions in the broader lending market.
The Zacks Consensus Estimate anticipates Upstart will report revenue of $200.7 million for the quarter. This projection suggests a significant increase of 57.1% compared to the same period last year.
Expectations for earnings per share also show a turnaround. The consensus mark is pegged at 19 cents per share, a notable improvement from the loss of 31 cents per share reported in the prior-year quarter. The outlook for the bottom line has remained unchanged over the past 60 days.
Historically, the company has exceeded earnings expectations. UPST's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise registering 188%. Analysts track these trends on various Earnings Calendar resources.
However, predictions for the upcoming report are less certain. According to the Zacks earnings prediction model, which considers factors like Earnings ESP, a conclusive forecast for an earnings beat is not present this time. UPST holds a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%, a combination that does not strongly favor exceeding the estimate.
Upstart's strategy to operate as a multiproduct platform and innovative features are seen as positive factors potentially supporting performance. Its focus on unsecured loans, its AI technology assessing borrower creditworthiness, and efforts to automate the loan process may have contributed to results. Partnerships with banks and credit unions, along with cost-cutting measures including workforce reduction, could also influence the quarter's outcome.
Conversely, macroeconomic uncertainties and volatility are headwinds. Elevated consumer risk and dislocations in capital markets have weakened demand and funding for the platform. While discussions around potential Federal Reserve interest rate cuts exist, the macro environment remains challenging.
UPST stock has seen considerable upward movement, surging 103.4% over the past year. This performance has outpaced the Zacks Financial Miscellaneous Services industry's decline of 0.1%.
Despite the recent stock performance, valuation remains a point of discussion for some analysts. Upstart is trading at a premium compared to the industry average based on price-to-sales ratios. This valuation metric suggests the stock may be expensive relative to current sales.
Experts publishing analysis like Upstart's Q1 Preview note the company's business execution has improved, but dependency on market conditions persists. Key metrics watched by investors include contribution margin, loan volume growth, new capital partnerships, and delinquency trends, along with management's guidance for future performance.