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Written by Jeremy Bowman for The Motley Fool->
Fintech stocks gained broadly as the top banks reaffirmed the opportunity in the private credit market.
The market shifted back to risk-on stocks as tensions cooled in Iran.
Upstart looks cheap for its growth potential.
Shares of Upstart (NASDAQ: UPST), the AI-based loan origination platform, were moving higher last month as the company benefited from the broader risk-on positioning as tensions cooled in Iran, and stocks soared again.
There was not much company-specific news out on Upstart, but the company did launch a new line of credit product called "Cash Line" that was well-received by investors.
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By the end of the month, the stock had finished up 23% according to data from S&P Global Market Intelligence.
As you can see from the chart below, the stock tracked with the S&P 500 for the first half of the month, and then soared on the Cash Line announcement and other news.
Upstart was one of several fintech stocks to soar last month after fears about a private credit bubble cooled off, lifting stocks like Upstart in the middle of the month.
Morgan Stanley said in its earnings report out on April 15 that risks in private credit were "significant but not systemic," which was seen as good news for stocks like Upstart, which rely on private credit investors buying its loans.
The stock jumped 13% on April 15 on a combination of factors, including the broad market soaring on favorable news from the Middle East, the comments from Morgan Stanley on private credit, and Upstart's launch of Cash Line.
Cash Line is the latest innovation from Upstart and offers borrowers a credit limit that only goes up, instant deposits, and a $200 minimum once approved.
The stock got another bump on April 22 when it announced a $1.2 billion forward-flow agreement with Centerbridge, which agreed to purchase up to that much in consumer loans originated on the Upstart platform. The following week, it made a similar $1.25 billion agreement with Fortress.
Upstart will report earnings on Tuesday, and the stock could be poised for a big move, as it has struggled of late even as the business has been executing effectively.
Analysts are expecting revenue to jump 42% to $303.4 million, and for adjusted earnings per share to increase from $0.30 to $0.43. Considering the stock now has a very reasonable price-to-earnings ratio, there's a lot of upside potential for the stock if it can reassure investors of its growth potential.
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Jeremy Bowman has positions in Upstart. The Motley Fool has positions in and recommends Upstart. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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