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For the third quarter of 2022, Upstart expects revenue of $170 million. The Zacks Consensus Estimate for the top line is pegged at $171.67 million, suggesting a decline of 24.86% from the year-ago reported figure.
The consensus mark for the bottom line has been unchanged at a loss of 7 cents per share over the past 30 days, suggesting a year-over-year decline of 111.67%.
The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 78.12%.
For the third quarter, Upstart estimates a 25% reduction in revenues from the second quarter due to funding constraints in the marketplace. Interest rate hikes by the U.S. Federal Reserve increase the risk of credit default, which impacts top-line growth of its partner companies using Upstart’s AI-based credit models. This, in turn, is expected to have impacted Upstart’s top-line growth negatively in the to-be-reported quarter.
The company reported a loss of $30.183 million in the net interest income segment in the second quarter of 2022. UPST entered multiple loan sale transactions, some of which incurred a negative fair value impact, as the valuation marks of certain loans continued to be negatively impacted by the rising interest rate environment. This is expected to have continued in the third quarter of 2022 since interest rate hikes prevail.
This is also expected to have increased loan pricing in the company’s platform and lowered approval rates for loan applicants, thus, reducing transaction volume and affecting the top line.
However, Upstart’s third-quarter performance is likely to have benefited from its strategy to operate as a multi-product company. Strength across Upstart’s auto refinance and personal loan product portfolios is expected to have favored the company’s performance in the to-be-reported quarter.
Upstart’s acquisition of Prodigy in 2021 is likely to have reaped benefits for the company in the third quarter. Prodigy has helped Upstart roll out its auto retail products. Due to its buyout of Prodigy, Upstart’s dealership partnership extended from 500 dealers in the first quarter, 2022 to 640 in the last reported quarter. This is expected to have continued in the to-be-reported quarter.
What Our Model Indicates
Our proven model conclusively predicts an earnings beat for Upstart this time around. Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
UPST has a Zacks Rank #3 and an Earnings ESP of +42.86%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are a few other companies worth considering, as our model shows that these, too, have the right combination of elements to beat on earnings in their upcoming releases:
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Upstart (UPST) to Report Q3 Earnings: What's in the Offing?
Upstart Holdings (UPST - Free Report) is slated to release third-quarter 2022 results on Nov 8.
For the third quarter of 2022, Upstart expects revenue of $170 million. The Zacks Consensus Estimate for the top line is pegged at $171.67 million, suggesting a decline of 24.86% from the year-ago reported figure.
The consensus mark for the bottom line has been unchanged at a loss of 7 cents per share over the past 30 days, suggesting a year-over-year decline of 111.67%.
The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 78.12%.
Upstart Holdings, Inc. Price and EPS Surprise
Upstart Holdings, Inc. price-eps-surprise | Upstart Holdings, Inc. Quote
Factors to Note
For the third quarter, Upstart estimates a 25% reduction in revenues from the second quarter due to funding constraints in the marketplace. Interest rate hikes by the U.S. Federal Reserve increase the risk of credit default, which impacts top-line growth of its partner companies using Upstart’s AI-based credit models. This, in turn, is expected to have impacted Upstart’s top-line growth negatively in the to-be-reported quarter.
The company reported a loss of $30.183 million in the net interest income segment in the second quarter of 2022. UPST entered multiple loan sale transactions, some of which incurred a negative fair value impact, as the valuation marks of certain loans continued to be negatively impacted by the rising interest rate environment. This is expected to have continued in the third quarter of 2022 since interest rate hikes prevail.
This is also expected to have increased loan pricing in the company’s platform and lowered approval rates for loan applicants, thus, reducing transaction volume and affecting the top line.
However, Upstart’s third-quarter performance is likely to have benefited from its strategy to operate as a multi-product company. Strength across Upstart’s auto refinance and personal loan product portfolios is expected to have favored the company’s performance in the to-be-reported quarter.
Upstart’s acquisition of Prodigy in 2021 is likely to have reaped benefits for the company in the third quarter. Prodigy has helped Upstart roll out its auto retail products. Due to its buyout of Prodigy, Upstart’s dealership partnership extended from 500 dealers in the first quarter, 2022 to 640 in the last reported quarter. This is expected to have continued in the to-be-reported quarter.
What Our Model Indicates
Our proven model conclusively predicts an earnings beat for Upstart this time around. Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
UPST has a Zacks Rank #3 and an Earnings ESP of +42.86%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are a few other companies worth considering, as our model shows that these, too, have the right combination of elements to beat on earnings in their upcoming releases:
Backblaze (BLZE - Free Report) currently has an Earnings ESP of +7.41% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
BLZE shares have lost 71.7% in the year-to-date period compared with the Zacks Internet - Software industry’s decline of 59.5%.
Tencent Music Entertainment Group (TME - Free Report) has an Earnings ESP of +4.76% and a Zacks Rank #2 at present.
TME shares have lost 45.2% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 37.7%.
The Trade Desk (TTD - Free Report) has an Earnings ESP of +2.13% and a Zacks Rank #2 at present.
TTD shares have lost 44.7% in the year-to-date period compared with the Zacks Internet - Services industry’s decline of 43%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.