Could Upstart be the next millionaire maker?

Investors are constantly searching for stocks with profit potential that can turn a manageable investment into a multimillion-dollar fortune. Names like Berkshire Hathaway, Costco, or Netflix quickly come to mind as success stories among shareholders. But could the fintech company Upstart also achieve such a triumph? Since its founding over a decade ago, Upstart has relied on artificial intelligence (AI) and demonstrated that this technology can be effectively used in the financial services sector. In the past twelve months, the stock has risen by an impressive 78%. But is this enough reason to believe in a multimillion-dollar future? A special feature of Upstart is the application of its AI platform, which analyzes 1,600 different parameters to assess the creditworthiness of potential borrowers. This method allows many people, who are deemed risky by traditional FICO scores, to obtain loans on more attractive terms. For banks and credit unions, this provides the opportunity to approve more loans without increased default risk. The company is active in the personal, auto, and mortgage loan sectors—markets that record trillions in loan closings annually. To date, however, Upstart has only enabled loans worth about 40 billion US dollars, pointing to enormous growth potential. Nevertheless, investing in Upstart also carries risks. The company's dependence on macroeconomic conditions is considerable. Low interest rates boost loan demand, while high rates can lead to a decline. This sensitivity to external factors gives Upstart's financial performance a cyclical nature, which does not match the idealized image of a rapidly growing technology company and may disappoint some investors.