Lending platform Upstart filed on November 5, 2020 for an initial public offering with plans to raise $100 million. The company plans to listed on the Nasdaq with the ticker symbol of UPST on December 15, 2020. The stock opened at $26, hit a high of $30.01 and closed Wednesday at $29.47, up 47.35%.
What is an IPO and how it works
IPO is a process of offering shares of a private corporation to the public in a new stock issuance. Why go public? The primary benefit of going public is easier access to capital.
To go public, a company must have a track record of growth and other favorable results and hire an investment bank (Goldman Sachs, BofA Securities and Citigroup in Upstart case) to come in and underwrite the IPO. The underwriters also performed due diligence and verified financial information and business model.
Once the paperwork done, the company sells the stock to institutional investors. When the initial block of shares has been sold, the company sets an initial price and date for the stock to begin trading on a stock exchange.
Financial Indicators before Upstart IPO
Since its inception, Upstart Holdings raised $144.10M, the latest round in April 2019 delivering $50M. The key investors include Khosla Ventures (8.40%), First Round (5.20%), Third Point Ventures (19.50%), Collaborative Fund, Rakuten (5.30%), Stone Ridge Trust V (9.10%), Healthcare of Ontario Pension Plan (HOOPP), The Progressive Corporation, and First National Bank Of Omaha.
The number of loans issued by the platform increased by 30% in the nine months of 2020, while the number of loans in 2019 rose by 88%.
In the meantime, Upstart Holdings' earnings went up by 44% to reach $146.70M in the nine months of 2020, against $101.60M in the same period in 2019. The net profit for the first nine months of 2020 rose to $5M, while in 2019, there was a $6.5M net loss.
Upstart IPO key facts
● Yield Potential: 32%
● IPO Date: December 15
● Exchange: NASDAQ (trading as UPST)
● IPO Size: $252M
● Starting Price: $20.00-$22.00
● Underwriters: Goldman Sachs, BofA Securities, Citigroup
● Earnings in 9 mon. 2020: $147M
● EBIT in 9 mon. 2020: $1M
● Net Profit in 9 mon. 2020: $5M
● Net Debt in 9 mon. 2020: 0
If the IPO is successful, the company's market cap will exceed $1.6B.
How to Buy Upstart Stocks Before the IPO (Offering Price)
In the past, IPOs as highly profitable investments were available only to the privileged customers of the leading brokerage firms and it was challenging for retail investors to gain access. You couldn't buy shares paying the price set by the company and you had to wait until the shares actually start trading on the public stock market at whatever stock price supply and demand allows.
Technologies and marketplaces changed the rules of the game, now regular investors can get pre-IPO shares. To participate in Upstart IPO you need to use an IPO investing app like Freedom Finance (NASDAQ: FRHC), TD Ameritrade or Fidelity. They give its customers access to IPOs and secondary offerings through their existing brokerage account. Also you can buy Upstart shares when a company goes public via a commission-free trading app like eToro.
🚨 Detailed Instructions How to Participate in the Upstart IPO before public trading:
Below we share the instruction how to participate in the approaching IPOs using Freedom Finance (Tradernet platform). This marketplace is chosen as an example because Upstart is already listed there.
* Freedom Finance services are NOT available to US citizens and residents.
- Apply for a Freedom Finance account — you need to prepare your identity document and a document confirming the address of residence (utility bill). The verification process is very fast, it will take 2 minutes to create your account.
- Deposit your account — to participate in an IPO, your account must have available funds in the amount you send IPO application for.
- Wait for a request to participate in the IPO — a few days before IPO date you will get a notification (email and SMS text message) from Freedom Finance. You will have about 48 hours to apply for the IPO.
- Submit a request to participate in the IPO — go to IPO section of the platform > you will see the IPO listing with the share price set by the underwriter > click Participate in the IPO > input the amount you want to invest > Send your application. Note: Before the book closing, a request can be withdrawn. At the time of the book closing, 1 day before the start of the exchange trading, the specified amount will be blocked on the account.
- Wait for allocation — The actual number of stocks purchased during an IPO depends on supply and demand. The higher underwriter reserves the right to partial execution of collective applications. So if the demand is high you may get less than you applied for. Of course, you will only pay for the shares purchased. The rest of the funds will be returned to your account.
- Start of trading — With the beginning of the public trading on the stock exchange, the purchased shares will appear on the account and a lock-up period will start— a 93-day period of prohibition on sale. You can’t sell stocks, but you can track their current value and growth indicators in your personal member area and a trading terminal.
- Closing your trade — At the end of the 93 days lock-up period, you will be able to manage your stocks at your discretion — leave in the portfolio or sell and withdraw money or transfer the stocks to another depository/ broker in your name. This can be done in your account by clicking the ‘Sell’ button next to the name of the security. In this case, a commission of 0.5% of the amount of the sale transaction is charged.
When is the Upstart IPO date?
December 15, 2020
What is Upstart IPO price range?
Starting Price: $20.00-$22.00
What IPOs are Currently Available for 2021?
IPO applications are still open for the following companies:
- Roblox – platform to develop and maintain own games, 164M active users.
- Affirm – platform offers interest-free online loans, partnered with Shopify
- Robinhood – discount stock and crypto trading app that had over 13M clients
How to Invest in Upstart after the IPO date (opening price)?
After the IPO you can buy Upstart stocks via a commission-free trading app like eToro on the first trading day.
- Register here
- Fund your account
- Type into the search Upstart or UPST and click “Trade”
- Choose “Buy” and enter your amount
That’s it. You just bought a stock without any commission.
What is the Upstart ticker (stock symbol)
Upstart's ticker is UPST