Could Investing in Upstart Stock Today Secure Your Financial Future?

Upstart Holdings (UPST -2.50%) stock is up 93% over the past year. If you didn't know about Upstart's history, you might think that's exciting. If you are familiar, you already know that it's had extreme ups and downs over the past few years, and it's still 84% off of its all-time highs.

With its recent humbling, could Upstart now be poised for growth and increased shareholder value? Let's explore whether investing in Upstart stock today might pave the way for long-term financial success.

Keep an eye on the interest rates.

Upstart is an artificial intelligence (AI)-based credit evaluation platform that uses data and machine learning to help creditors make better lending decisions. Traditional credit scores have been around for decades, and in today's operating climate, where there's so much data and technology needed to use it effectively, it makes sense to pivot toward a data-rich model like Upstart's. Management claims that it helps more banks approve more loans without adding risk, and since that's the whole basis of what a creditor does, it could be a tremendous asset.

Despite the potential of the technology, lenders have been hesitant to embrace it. When Upstart launched its IPO four years back, it had just 10 credit partners, with a single partner responsible for 72% of its revenue. Over the years, Upstart has expanded its client base to over 100, primarily including smaller firms that may not be familiar to the average investor.

The traditional credit evaluation platforms like Fair Isaac, in the meantime, continue to deepen their relationships with their longtime customers, and business has been brisk despite the challenges Upstart has been facing. At times like these, when there's economic instability, customers rely on partners that are known and established.

Conversely, Upstart has a limited history and employs innovative techniques to pinpoint creditworthy borrowers. While these methods could prove advantageous in the long run, the heightened risk of defaults makes it more challenging for them to accurately identify reliable borrowers, resulting in fewer advantages compared to traditional, proven models.

With interest rates decreasing, Upstart's operations may begin to flourish. The company continues to introduce new offerings, including the recently