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Why Is Upstart Stock Down And Should You Be Buying? | UPST Stock News - YouTube
Channel: Newborn Investor
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hello everyone newborn investor here and
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welcome to another video
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fintech startup upstart had a very
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successful ipo with stock price
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soaring over 500 from an ipo price of 20
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what goes up must come down and upstart
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was no different
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the stock is going through a pullback
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from its all-time highs bottoming around
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a hundred and ten dollars so will the
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stock continue to drop or is it going to
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bounce from here
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in today's video we are gonna talk about
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it and many more so make sure to stick
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around as we're starting
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right now
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upstart uses artificial intelligence to
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make credit lending decisions
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a company offers an ai powered platform
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through which customers are connected to
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upstart's banking partners
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the company makes money in the form of
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fees from banks for facilitating and
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servicing
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loans the highly automated digital
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platform
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helps the company stand out from
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competition by finding quality borrowers
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everything was going well for upstart
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until lately the stock
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took a nose dive dropping around 40
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percent
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from all-time highs so what exactly led
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to the drop
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we will get to it in a minute but before
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that if you like the video and
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find it valuable please make sure to hit
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the like and subscribe button i really
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appreciate your support as it keeps me
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motivated to put in the long hours for
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making these videos
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all right let's move on upstart priced
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its ipo around 20
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per share offering around 11 million
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shares the stock
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opened to trading and was on a ride with
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stock price hitting a high of 190
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in a few weeks realizing the opportunity
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the company pushed a secondary offering
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aiming to sell another 2 million shares
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the secondary offering was well timed
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and the proceeds from the offering
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exceeded 250 million dollars which was
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more than double the proceeds from
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primary offering this couple with
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inflated market cap
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built a massive selling pressure causing
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the stock price to drop
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another reason for the drop was
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upstart's lockup expiration in june
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the stock was ridiculously priced
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tempting insiders to dump their shares
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during that time upstart was trading
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around 20 times sales multiple
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daily trading volume increased manifold
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with 30 day average trading volume
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topping 5 million shares and early
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investors
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saw it as an opportunity to realize
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profits and that's exactly what happened
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there is no denying the fact that there
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is a strong disconnect between upstart's
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fundamentals and the stock price
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management failed to discuss the future
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growth potential
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of the business in the last earnings
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call growth rate
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has seen a decline and is forecasted to
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stall between 20
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to 30 percent upstart currently trades
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at over 20 times sales forecast for 2021
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while 2023 revenue forecast is only at
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870 million dollars
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to find opportunities for growth upstart
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recently purchased
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prodigy software to expand further into
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auto loans
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this purchase expands its loan market by
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nearly seven times
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however i'm not convinced to jump in
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considering the extremely high
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valuation i feel the fintech market is
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getting way
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overcrowded a lot of players have gone
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public with almost
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everyone having a successful ipo a firm
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lending club green sky and so far to
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name a few
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lending club seems to be much like
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upstart offering a unique
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landing marketplace to weather the storm
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upstart has to offer competitive pricing
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for its loans which in turn will lead to
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increasing
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cost and decreasing revenues so what's
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my take on upstart
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upstart undoubtedly is a promising
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fintech with the direct to consumer
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lending platform
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making the loan process more transparent
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and modern
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however my concern is valuation
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personally i'll wait for a better price
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and if that does not happen
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i'll move on to the next one now i would
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love to hear from you guys
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what do you think about upstart leave a
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comment below with the answer and i'll
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be sure to follow up with you
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also if you like this video and found it
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valuable please make sure to hit the
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like and subscribe button
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i really really appreciate your support
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so until you hear from me again
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stay safe and thanks for watching bye
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you
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