SAN MATEO, Calif. - Upstart Holdings, Inc. (NASDAQ: UPST), a cloud-based artificial intelligence lending platform, has announced plans for a private offering of $425 million in Convertible Senior Notes due 2030, aimed at qualified institutional buyers. The company also intends to give initial purchasers an option to buy an additional $75 million of the notes within a 13-day period starting from the issue date.
The Convertible Senior Notes will be senior, unsecured obligations of Upstart, with interest payable semi-annually. Set to mature on November 15, 2030, these notes can be converted into cash, shares of Upstart's common stock, or a combination of both, at the company's discretion. Specific terms, such as the interest rate and initial conversion rate, will be established during the pricing of the offering.
Upstart has stated that the net proceeds from the offering will be used for general corporate purposes, which may include repaying or retiring existing debt. The offering will be conducted in compliance with Rule 144A under the Securities Act of 1933, through a private offering memorandum.
The securities, both the notes and the potential shares of common stock issuable upon conversion, have not been registered under the Securities Act or any state securities laws. Therefore, they may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.
This announcement, as clarified by Upstart, is not an offer to sell or a solicitation of an offer to buy the securities. Moreover, it does not constitute an offer, solicitation, or sale in any jurisdiction where it is unlawful to do so.
The information for this report is based on a press release statement from Upstart Holdings, Inc.
In other recent news, Upstart Holdings Inc (NASDAQ:UPST). reported strong third-quarter results, with a 43% sequential increase in lending volume and a significant rise in revenue. The company's expansion into the auto loan and home equity line of credit (HELOC) markets yielded promising results, with the HELOC business doubling and auto loan originations increasing by 46%. Despite a GAAP net loss of $7 million for Q3, Upstart anticipates continued growth, projecting total Q4 revenues of approximately $180 million and an adjusted EBITDA of $5 million.
Analysts at Mizuho (NYSE:MFG) have raised the price target for Upstart to $90 from the previous $48, maintaining an Outperform rating on the stock. The adjustment follows Upstart's positive performance in the third quarter and the company's increased fourth-quarter guidance, projecting revenue from fees to reach $185 million, up from the prior estimate of $165 million. Mizuho's revised estimates are based on these recent developments and the firm's confidence in Upstart's continued strong performance.
Meanwhile, BTIG upgraded Upstart's stock rating from Sell to Neutral, acknowledging a significant increase in the company's stock value and the positive performance of Upstart's loan volumes. The firm notes that while concerns about the company's operations persist, the likelihood of accelerated volume growth is a driving factor for the stock.
In the midst of these developments, Upstart also secured a strategic partnership with Blue Owl, which guarantees up to $2 billion in loan purchases over the next 18 months. These recent developments underscore Upstart's ongoing commitment to growth in the lending sector.
InvestingPro Insights
Upstart Holdings' decision to offer Convertible Senior Notes comes at a time when the company is experiencing significant market momentum. According to InvestingPro data, Upstart has seen a remarkable 271.25% price total return over the past year, with a particularly strong 64.78% return in the last month alone. This surge in stock price has pushed the company's market capitalization to $7.07 billion.
Despite the impressive stock performance, InvestingPro Tips highlight that Upstart is not currently profitable, with a negative P/E ratio of -35.9 for the last twelve months. This context adds importance to the company's move to raise additional capital through the note offering, potentially to strengthen its financial position or fund growth initiatives.
The company's revenue growth of 10.89% over the last twelve months, coupled with a robust gross profit margin of 74.62%, suggests that Upstart's AI-driven lending platform continues to gain traction. However, an InvestingPro Tip indicates that analysts do not anticipate the company will be profitable this year, underscoring the importance of the planned capital raise for sustaining operations and investing in future growth.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Upstart Holdings, providing deeper insights into the company's financial health and market position.
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