2 growth stocks down 65% to 77% that could skyrocket in 2022, Wall Street says


Despite the wide S&P 500 Stock index closing 2021 with a strong gain of 28%, a year-end sell-off sent some tech stocks plunging. For investors, this presents exciting opportunities, although it should be remembered that all stocks that lose more than half of their value have inherent risks.

Nonetheless, these two innovative companies could be the future of their respective industries, and top Wall Street analysts believe they could more than double in 2022.

Image source: Getty Images.

1. Starting holdings: down 65%

Holdings reached (NASDAQ: UPST) uses artificial intelligence to create loans for its banking partners. The company believes the decades-old FICO scoring system fails to accurately measure the creditworthiness of modern borrowers. Therefore, he designed an algorithm that evaluates over 1,000 data points and reduces the risk of default by 75% for the same approval rating.

Upstart earns income through fees when it grants a loan for a bank, and also through the sale of its software, which institutions can connect to their own loan applications. It started out as small unsecured loans with personal loans, but has now expanded into the much larger auto finance market.

The company’s new Upstart Auto Retail software also serves as a sales and loan-making platform, and the number of U.S. auto dealers who have adopted it has grown 219% in the past 12 months to 291. As a result, Upstart exceeded all revenue. expectations. Once it releases its fourth quarter results for 2021, it is expected to have exceeded $ 806 million in revenue for the full year, well above the $ 500 million originally forecast.

That $ 806 million figure would represent 245% more revenue the company generated in 2020. And in 2022, it is expected to cross the $ 1.2 billion mark, but that could turn out to be a conservative estimate based on on the explosive growth of its vehicle loan segment.

Upstart stock peaked at $ 401 in October 2021 before slumping 65% to $ 133 amid the tech sell-off. But now the Wall Street investment bank Citigroup thinks the stock could skyrocket to $ 350, which is a 130% gain from here.

A smiling person sitting in a car, holding the keys as if they had just been bought.

Image source: Getty Images.

2. Lemonade: Down 77%

Like Upstart, Lemonade (NYSE: LMND) is a financial technology company that harnesses artificial intelligence. Its goal is to transform the insurance industry by using technology to make the customer experience more tolerable. After all, few consumers enjoy doing business with traditional insurance companies, especially when it’s time to file a claim.

Lemonade’s artificial intelligence bot, Maya, can produce an estimate for a customer in 90 seconds, and when it comes to making a claim, payments can be processed in three minutes. The company has focused on four main areas of insurance – renters, landlords, pets, and life – but has recently made a foray into the much more lucrative auto insurance market, the most important to this day.

When it relies on artificial intelligence to enter a new segment, the algorithm needs time to learn. Contrary to its usual strategy, Lemonade chose to seek assistance in entering the auto insurance market by acquiring Metromile, another AI-based insurance broker with over 3 billion miles of data under its belt and licenses in 49 US states, in November 2021. This will get Lemonade up and running and save time and money. precious money by perfecting its algorithm to assess risk appropriately.

Customers flock to Lemonade’s products as a whole. At the end of the recent third quarter, the company had 1.36 million customers, a 44% increase year over year. And if it meets analysts’ expectations for revenue, it will generate incredibly robust growth there as well.

Metric

2020

2021 (Estimate)

2022 (Estimate)

TCCA

Income

$ 94 million

$ 127 million

$ 215 million

51%

Data source: Lemonade, Yahoo! Finance. CAGR = compound annual growth rate.

Lemonade stock could be down 77%, but the Wall Street firm Piper sandler thinks it could bounce back to $ 98, which would be a whopping 133% return from the current price of $ 42. This is not without risk, as the company is losing a significant amount of money and should continue to do so.

But reforming the customer experience in the insurance industry appears to be a fruit within reach, so if Lemonade can reach scale it is likely to be hugely successful in the future.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


Comments are closed.