It has also made progress in expanding the size of its total addressable market by moving into car loans. That market offers significant opportunities for growth because it is more than seven times larger than the personal loan market, on which the company had previously focused.

In this column’s view, Upstart’s shares have fallen since our initial recommendation largely because of the prospect of rising interest rates in America.

Higher than expected inflation over recent months means that the Federal Reserve may adopt a more hawkish stance than previously expected. This could create more difficult trading conditions for lenders, such as higher default rates on existing loans and lower demand for new borrowing, and this would have a negative impact on the company’s financial performance.

The potential for a faster pace of interest rate rises has also been detrimental to investors’ appetite for growth stocks – and few deserve that description more than Upstart.

Companies whose valuations are largely based on their future growth prospects, rather than their profitability today, are generally affected to a greater extent by rising interest rates. Higher interest rates reduce the value of their future cash flows at a higher rate, so their present value is lower.

As a result, growth stocks such as Upstart have become far less popular relative to value stocks over recent months.

Of course, this trend away from growth to value stocks could continue. This, alongside the potential impact of rising interest rates on lenders, could lead to further volatility in Upstart’s share price over the short run.

However, on a long-term view Questor retains its belief that the company’s investment prospects are sound. Notably, it has significant room for growth in new product categories. For example, it plans to expand into small business lending this year and into the highly lucrative mortgage market in 2023.