This has been a lousy year for investors in growth stocks. That iShares S&P 500 Growth ETF has plummeted an impressive 16% since early 2022.

Rising interest rates, intended to curb runaway inflation, are already making markets nervous about highly valued growth stocks. To make matters worse, Russia’s invasion of Ukraine cut off both countries from the global economy. As is often the case when markets plummet, even stocks of great companies with bright futures have lost a lot of ground.

Today I want to tell you about a fintech stock that’s down around 76% since its peak last fall and now looks like a great bargain.

Upstart Holdings is a high growth stock that has delved deep into value

shares of Ordinary Holdings (UPST -5.78%) rose to unimaginable heights after its market debut at the end of 2020. However, when times get tough, stocks that have already priced in years of growth tend to fall very quickly. At its peak, the market valued this company at more than $30 billion. Now the market cap is just under $8 billion.

You wouldn’t know it by looking at Upstart’s stock chart, but this innovative fintech business is growing by leaps and bounds. Last year, total sales rose 264% to $849 million.

Upstart operates a lending platform enriched with artificial intelligence (AI) algorithms. By including more data points than the old fashioned one The beautiful Isaac FICO scores, which banks and credit unions typically use to assess individual credit risk, Upstart finds creditworthy borrowers who would have slipped through the cracks.

Lenders pay Upstart upfront fees and a percentage of future payments, but the company rarely keeps loans on its own books. This makes its operations highly profitable and relatively insulated from economic downturns.

Now that it’s well past its peak, you can buy Upstart stock for about 40 times future earnings expectations. That’s a sky-high valuation compared to most companies, but not for one that’s growing this fast. This year, management expects revenue to grow 65% year over year to about $1.4 billion — and that’s just a drop in the bucket compared to the company’s overall available market.

Start your engines

Upstart’s performance in 2021 has been stellar, while still focusing on personal lending. This year, the company is expanding into the much larger auto loan market, and it’s doing very well. This March Subaru and Volkswagen tasked Upstart with modernizing the car buying experience at its dealerships.

This year, Upstart expects to process approximately $1.5 billion in auto loan transactions. That’s a great start, but it’s just the beginning. In the U.S. alone, auto buyers borrow about $727 billion annually, and according to Upstart, there’s much less competition for auto loans than for the personal loan category, which it already dominates.

Upstart has hired teams of developers to build new small business lending and mortgage platforms. The small business loan category is slightly smaller than the auto loan category, and the mortgage loan market is huge. US banks make approximately $4.6 trillion in home loans annually.

We’ll learn much more about Upstart’s expansion beyond the limited consumer credit market when the company reports first-quarter earnings after the bell on Monday, May 9, 2022. The Federal Reserve Bank’s recent decision to raise interest rates by 0.5% will slow the overall rate of lending across the board. Even if it cuts the company’s available market in half, there’s still plenty of room to grow as the world’s first and leading AI-powered lending platform.