Old-school, traditional lenders now have a major threat, and its name is Upstart (NASDAQ:UPST). If you’re ready to join a revolution in the financial technology (fintech) market, I invite you to take a look at UPST stock.

However, you can put the stock on your watch list without actually buying it now. When an asset gets too far ahead of itself, the best strategy usually is to wait patiently for a better buy-in price.

Just to recap, Upstart provides lending services driven by artificial intelligence (AI).

CEO Dave Girouard once boldly declared, “Lending is the center beam of revenue and profits in financial services, and artificial intelligence may be the most transformational change to come to this industry in its 5,000-year history.”

So, apparently, this is a company and a technology that’s 5,000 years in the making.

Even with that, you’ll probably still want to wait a little while before jumping into UPST stock.

A Closer Look at UPST Stock

Upstart’s initial public offering (IPO) took place on Dec. 16, 2020. Prior to that, the company had priced its offering at $20 per share.

However, UPST stock’s first trade on the Nasdaq Exchange was actually for $26. Impressively, the share price increased 30% in afternoon trading on that first day.

The stock’s momentum continued throughout 2021. Astoundingly, the share price reached $100 in February, $200 in August and $300 in September.

By early November, UPST stock was trading at $325, a far cry from the IPO price. If you’re a value-focused investor, then some alarm bells should be ringing right now.

Upstart’s trailing 12-month price-to-earnings (P/E) ratio is approximately 350. This suggests that the shares are rather pricey.

The momentum or “momo” traders might like UPST stock’s upward trajectory.

On the other hand, value investors may prefer to wait for a lower price point – something in the $200s, let’s say – rather than buy the stock after it just posted a 1,000%+ gain.

Worthy of Your Attention

Don’t get me wrong. I like this company a lot. My only concern is UPST stock’s high price tag.

Regarding his company and its business model, Girouard asserts, “AI-led disruption targeting dramatic inefficiency in one of the largest segments of our economy is worthy of your attention.”

He’s making a fair point. The traditional personal-loan paradigm could use a tune-up in the digital age, and Upstart is the right start-up to make that happen.

Instead of relying on credit-score-based lending models, Upstart uses machine learning to more accurately identify borrower risk.

This allows Upstart to approve more applicants, improve access to affordable credit and reduce lending risk (at least in theory).

Some Analysts Are Concerned

Is this a lucrative way to do business? Girouard pointed out that Upstart’s second-quarter 2021 revenues grew to $194 million, representing a 60% improvement over the prior quarter.

So, it’s reasonable to conclude that Upstart is on the right track, at least in terms of revenue generation. On Wall Street, however, it’s tough to get consensus on where UPST stock might be headed. EMJ Capital’s Eric Jackson reportedly set $1,000 price target on the stock.

In contrast, Bank of America’s Nat Schindler downgraded Upstart to “underperform” and issued a price target of $300 on the stock.

Meanwhile, Jefferies analyst John Hecht downgraded Upstart from “buy” to “hold.” Schindler and Hecht both seemed to have concerns about the stock’s high valuation.

Even with that concern, however, Hecht seems to envision Upstart as a serious contender in the modern lending market.

“We believe the current share value reflects strong and successful market penetration in the personal and auto loan categories over the next few years,” Hecht wrote.

The Bottom Line

Upstart has an audacious vision of transforming the way personal loans are originated.

It’s an all-or-nothing bet, and therefore, UPST stock might not be right for everyone.

And even if you appreciate Upstart’s bold mission, it’s probably wise to wait until the share price comes down into the $200’s before taking a position.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.