After years of struggling to find traction, Upstart’s (NASDAQ: UPST) business is moving again. Time spent focused on operations and improvement to the AI model has paid off. Now, the company is in a hyper-growth phase, expected to sustain above 50% growth in 2025, and the market for its stock is reacting favorably.
The stock price, which has also struggled with traction, is also moving higher and breaking above critical resistance targets. The outlook for 2025 now includes a stock price reversal and the potential for a long-lasting uptrend.
Upstart Accelerates Growth in 2024; Guides for Strength in 2025
Upstart had a solid Q4, capping off a strong year with 56% revenue growth. The $218.46 million net revenue also outperformed MarketBeat’s consensus by more than 1000 basis points on increased transaction volume, conversions, and full-automated transactions. Transaction volume, the key metric, is up by 68% on a nearly 20% increase in conversions. Full-automated transactions increased to 91% of the net, up 200 basis points, and are expected to remain strong. Financial services such as loans are uniquely well-positioned for automation and AI assistance, and Upstart is the leading provider for banks and credit unions.
Margin news is mixed, but the outcome is better than analysts had hoped. The company’s contribution margin contracted but was offset by the revenue strength, producing a surprising operational profit despite another quarter of GAAP losses. The $0.26 in adjusted earnings is $0.30 better than forecasted, and GAAP profitability is expected to return by the end of F2025.
Guidance is also good. The company forecasted $1 billion in net revenue for 2025, above the consensus forecast, adjusted profits, and at least break-even GAAP results. The balance sheet reflects the impacts of repositioning and increased loan volume but remains strong. The company’s cash position is solid and leverage low, with a total liability of about 3.75x cash and only 2x equity.
Analysts Response Unanimous: Upstart is on Track to Drive Value
The analysts’ response to the Q4 results and 2025 guidance is bullish, with 100% of the updates positive, including two upgrades and six price target revisions. The upgrades and revisions extend the trend that began in mid-2024 and provide a tailwind for the market, with sentiment firming and the price target increasing. The consensus target lags the stock price action in mid-February but is up 10% in the 24 hours since the report was released and more than 100% in the preceding 12, with the highest targets offering some upside. The opportunity is that analysts, driven by results, will continue the price target revision trend in 2025 and drive the market to new highs.
The sell-side activity suggests that the upswing in Upstart could be vigorous. The market was nearly 20% short at the end of January, with institutions buying in bulk. Institutional buying doubles the selling, strengthening the tailwinds already in place. The question is if the shorts will reposition at higher price points, and the odds of that are low, given the outlook for revenue growth and earnings performance.
Upstart Confirms Reversal: The Next Target Is $135
Upstart’s price action confirmed the reversal that began in 2024 after the Q4 release. The market surged more than 20% to a new multi-year high, moving above critical resistance targets and setting up for a larger move. The next significant resistance target is near $135, about 40% upside from the mid-February levels, and may be reached before mid-year. If the short-covering turns into a mad dash, $135 could be reached before the start of CQ2 2025.
Before you make your next trade, you’ll want to hear this.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now…
Investors expecting Archer Aviation’s (NYSE: ACHR) recent cash infusion to lift its price to new highs should think again. The injection is good news and lifts the liquidity position, providing about two years of operational visibility, but does nothing to improve the revenue and earnings outlook. The money shores up the balance sheet and is expected to accelerate the project, but revenue and earnings rely on FAA certification. The certification process is progressing, in the final stages, but slow. Final approval is expected before the year’s end, but there is no guarantee.
Revenue and earnings also rely on production capability, which is improving but not yet ready. The company got the CO for its Covington, GA production facility and hopes to rampproduction to 650 aircraft by 2030 but has yet to produce one. As it is, production is expected to begin early this year but faces challenges, including the final assembly of production lines and, of course, regulatory approval.
Investors now face dilution. The cash injection came at a cost of 35.5 million shares. The sales increased the share count by nearly 10% compared to the reported quarter ending September 2024, when shares were up 45% year-over-year. That is a significant headwind for the market, and ample shares are left to sell. The company probably won’t need to do it, but it is far too soon to say for sure.
The Sell-Side Accumulates Archer Stock, But the Upside Is Limited
The sell-side statistics support the share price, including bullish analysts, increasing coverage, and institutional buying. Institutions bought this stock on balance throughout 2024, with activity ramping at year-end and into the first half of Q1 2025.
Buying volume hit a two-year high in Q1 2025, outpacing selling by nearly 6-to-1, and has helped keep ACHR stock price trading near multi-year highs. Buyers include various institutions, including big-name mutual fund and ETF managers, as well as public and private investment capital. They owned nearly 60% of the aerospace stock in mid-February.
However, weak price target conviction among analysts offset the ramping institutional activity. They see this stock rising by 10% at the mid-point, but recent activity presents headwinds for the market. Canaccord Genuity lowered its price target, and JPMorgan Chase warned that hype in eVTOL was overblown, citing long-term opportunities and near-term challenges. Those challenges are why the short interest remains high and will likely cap gains until later in 2025. Short interest was above 15% at the end of January and is unlikely to have fallen since. The likely scenario is that short-sellers are selling into the rally and increasing their positions.
The Outlook for Archer Aviation Is Robust… In The Long-Term View
Archer Aviation’s near-term results are unlikely to catalyze the market unless the news includes final FAA approval and the commencement of production. However, the longer-term outlook includes revenue, which begins as a trickle in 2025, accelerates sharply in 2026, and is forecasted to run at a moderately high triple-digit pace for the next several years. Adjusted profits are expected before the decade’s end.
Archer Aviation: This Market Is Set Up to Fall
The daily charts of Archer Aviation’s stock price action are promising, showing a strong upswing and potential for a bullish momentum swing that could take it to new highs. However, the weekly charts present numerous hurdles and a high potential for price pullbacks. The hurdles align with previous price peaks, including those dating back to shortly after the IPO in 2021. They also align with the analyst’s consensus price target, which means a move to the consensus may not get much higher. The risk is that short-sellers will pile into the stock at this level and drive it down to critical support targets at $8 or lower.
Before you make your next trade, you’ll want to hear this.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now…
In the world of indicator purgatory, where investors load up their screens with dozens of different indicators that end up making so much noise that no real signals are given, one simple gauge can be followed for an accurate assessment of the stock market. That indicator is found in buying and selling activity from professionals, but not just any professional this time.
Warren Buffett, responsible for Berkshire Hathaway Inc. (NYSE: BRK.B)‘s holdings, has decided to continue on his course to focus on the value stocks (there are few of them) found in today’s market. These are harder to find because the S&P 500 now trades near its all-time high, leaving discounts in the dust, but that’s what makes following Buffett’s activities so powerful.
Apart from the fact that investors should be watchful of this value to growth spread, Buffett’s recent activity also says a lot about the energy sector. Out of all potential deals in the market, Buffett has chosen to go with energy, though it makes sense after Goldman Sachs analysts decided to recommend the commodity in their 2025 macro outlook report.
More than that, Paul Tudor Jones also said that the risk-to-reward in oil is unbelievable during a recent CNBC interview. With more of Wall Street’s attention turning to oil and oil stocks, it is clear that Warren Buffett is right again, but that’s not the only lesson investors can take away from this.
Now, after breaking down two of Buffett’s latest decisions, the trend out of growth and into value should start to make more sense for investors. However, there are a couple more factors that investors should consider before considering following Buffett in his recent buying spree for Occidental Petroleum stock.
Why Occidental Petroleum?
Buying over 700 thousand shares of stock is not something to be taken lightly, especially as Buffett now owns over 28% of the entire company. To clear it all up, here are some factors that investors can keep in mind moving forward in case more volatility decides to embrace the stock.
Knowing that they are fighting the biggest value investing legend on Wall Street, short sellers decided to close some of their positions over the past month. This can be seen in the 4.9% decline in short interest for Occidental Petroleum, a clear sign of bearish capitulation.
But Buffett wasn’t the only one who decided to come in and replace some of these bears who took off; institutional buyers from the Vanguard Group boosted their holdings in Occidental Petroleum stock by as much as 18.1% as of February 2025, bringing their net position to ahigh of $3.4 billion, or 7.3% ownership in the company.
With more buyers circling the stock, it would make sense for investors to start considering the upside versus the downside. At 68% of its 52-week high, Occidental Petroleum looks like it offers very little of one but a ton of the other.
Analysts at Mizuho share that view, keeping their price targets above the consensus despite recent stock declines. As of December 2024, their valuations for Occidental Petroleum stock were kept at $70 per share, which would mean not only grasping the stock’s 52-week high but an implied rally of as much as 46.4% from today’s low price.
Ultimately, here’s where value investors can really celebrate. Occidental Petroleum stock now trades at a price-to-book (P/B) of only 1.9x, which is a steep discount to the rest of the energy sector’s 4.3x average valuation today. This gives investors a risk-to-reward setup that would let them escape any volatility during the rotation out of growth and into value.
Before you make your next trade, you’ll want to hear this.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now…
The Night Owl is a financial newsletter that provides in-depth market analysis on stocks of interest to individual investors. Published by MarketBeat and Early Bird Publishing, The Night Owl is delivered around 9:00 PM Eastern Sunday through Thursday. If you give a hoot about the market, The Night Owl is the newsletter for you.
MarketBeat Media, LLC
345 N Reid Place, Suite 620, Sioux Falls, SD 57103. contact@marketbeat.com
