Breakfast News: UPST's Triumph and Tomorrow's Trends
February 12, 2025
Daily Updates: UPST's Adventure is Only Beginning
1. Upstart's Surging Success
Upstart (UPST -0.09%)) sauntered into the finance spotlight after smashing its Q4 estimates, resulting in a 25% post-market surge. The AI-powered lending platform wowed investors with a whopping 55% year-over-year revenue increase and a 68% surge in loan transactions[1][2]. While the company still isn't in the black, its Q4 net loss of $2.8 million fell significantly compared to the previous year's $42.4 million[2].
- Discerning Stock Picks: Motley Fool analysts rank Upstart ninth for its potential to outperform the market over the next five years[3]. Guided by a projected $1 billion in 2025 revenue and plans to achieve GAAP profitability, Upstart is poised to break even or even swing into the black[3]. In 2024, Upstart added 28 banks and credit unions to its platform, with a notable boost in conversion rates from 11.6% to 19.3%[1].
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2. Cloud-Powered Earnings Anticipated
After closing market hours, both Paycom (PAYC 1.44%) and HubSpot (HUBS 1.51%) will unveil their Q4 numbers. Both companies boast a track record of impressive earnings performance:
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- Paycom's Strength: Known for its HCM software, Paycom's recurring revenue helped drive a 11% year-over-year increase in Q3[4]. The forecasted full-year revenue sits at $2.07 billion[5]. With promising growth potential in Canada and Mexico, Paycom primed for an eventful Q4[5].
- HubSpot's Ascendancy: A CRM powerhouse, HubSpot reported a Q3 customer base surge of 23% year-over-year[4]. Transitioning to a seats-based pricing model in 2024, HubSpot watchers eagerly await signs of benefits[6].
3. Baidu's AI Revolution in the Offing
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Spatters of rumors suggest Chinese tech titan Baidu (BIDU -2.05%) will unveil its next-generation AI, aiming to challenge DeepSeek with lower-cost models.
- Multi-Modal Mayhem: Ernie 5.0, Baidu's AI upgrade, is believed to pack enhanced capabilities in amalgamating texts, images, audio, and video information[2].
- Cutting Costs: During the World Governments Summit in Dubai, Baidu CEO Robin Li forecast a massive decrease in AI model training costs. Li stressed the importance of open-source development for broader technology adoption[2].
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4. SoftBank's Surprise Loss
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Japan's SoftBank (SBGNF -1.23%)) threw investors for a loop as it posted a Q3 net loss of 369 billion yen ($2.4 billion)[7]. This came as a shock, given analysts anticipated a $1.5 billion profit[7].
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- Stargate Vision: SoftBank's founder and CEO, Masayoshi Son, revealed plans to invest up to $500 billion in the AI-focused Stargate project[8]. Shifting the company's emphasis from traditional investments, Son aims for AI dominance. However, there remains questionability regarding whether SoftBank has enough capital to finance such an endeavor[8].
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5. Foolish Footnotes
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Upstart's Current Performance and Outlook
Upstart's fourth-quarter earnings report showcased strong financial results, bolstering investor support for the AI-powered lending platform. Highlights include:
- Revenue and Transaction Surge: Upstart's Q4 earnings revealed a 56% year-over-year revenue growth and 68% jump in loan transactions[1][2].
- Stock Market Reaction: The enhanced performance led to a significant post-market surge, with Upstart's stock climbing by 30%[3].
- Year-to-Date Gains: Since the beginning of 2025, Upstart has outperformed the broader finance sector by double digits[4].
Upstart's Future Prospects
With promises of a billion-dollar revenue year and potential profitability by 2025, Upstart has set high expectations for the coming year. Key aspects of the company's plans include:
- Bold Revenue Projections: Upstart's CEO has expressed the expectation of hitting the $1 billion revenue mark in 2025[5].
- Earnings Expectations: Analysts forecast a sizable year-over-year increase in earnings for the current and upcoming quarters, signifying upbeat investor sentiment[2].
- Expanding Market Footprint: Upstart's ambitions extend beyond personal loans, intending to enter the auto loans and home equity lines of credit (HELOC) markets[6].
- Valuation Rationale: Despite premium pricing, Upstart retains a favorable Zacks Rank of #2 (Buy), suggesting the stock's potential to outperform[2][7].
Overall, while Upstart has overcome initial challenges and met investor expectations, uncertainty remains regarding economic conditions and the execution of future growth plans[1][2].
- Investors are keenly anticipating HubSpot's (HUBS) Q4 earnings, as the CRM company has a history of impressive earnings performance.
- To boost profitability, Upstart is considering expanding its lending services to include auto loans and home equity lines of credit.
- In the finance sector, Upstart's stock has outperformed the market significantly since the beginning of 2025, thanks to its impressive Q4 earnings.
- SoftBank's surprise Q3 net loss of 369 billion yen could potentially impact its ability to invest heavily in its AI-focused Stargate project.