For his second "Executive Decision" segment of Friday night's "Mad Money" program, host Jim Cramer spoke with Dave Girouard, founder and CEO of Upstart Holdings Inc. (UPST) .
The artificial intelligence-enabled lending service helps match consumers to lenders and came public in December.
Girouard said that all lending is moving towards artificial intelligence, and Upstart is able to help their banking partners speed up approvals, lower loan losses and increase automation so that everything runs smoother for higher profit margins. He said the improvements versus traditional lending approvals are dramatic.
Currently, Upstart is only in a few segments of the lending market, like personal loans and now some auto loans, but Girouard said the opportunity for growth is tremendous.
When asked why the U.S. lags the rest of the world in AI, Girouard explained that other countries lack lending bureaus and other legacy systems, so they've been able to leapfrog the U.S.
Let's check out a couple charts.
In this daily Japanese candlestick chart of UPST, below, we can see the entire and rather limited trading history of UPST. Our price history started last month with a rally and then a correction followed by another rally. In recent sessions, we can see two noticeable upper shadows telling us that traders are rejecting these higher prices. Trading volume has been light and the On-Balance-Volume (OBV) line has moved sideways suggesting a balance between buyers and sellers. We have limited history, but the 12-day price momentum study has diverged from the price action with equal highs when prices have made higher highs. This is not a positive sign for UPST in the short-run.
In this daily Point and Figure chart of UPST, below, we can see a potential upside price target of $109 but we can also see that a trade at $55 or lower could weaken this picture.
Bottom line strategy: I would stand aside for now, but keep UPST on my shopping list for the first quarter of 2021. A retest of the $45-$40 area would be a better location to probe the long side.
