Upstart’s $375 million convertible debt offering, scheduled to close on September 19, 2024, has an initial conversion price of approximately $45.66 per share. This price reflects a 30% premium over Upstart’s stock price of $35.12 as of September 16, 2024. The notes will convert at an initial rate of 21.9029 shares per $1,000 of principal, meaning that investors holding $1,000 in convertible debt can convert it into about 21.9 shares. Included is an upsized option of $56.25 million exercised by the initial purchasers to bring the total to 431.25 million.
As part of this deal, the notes will mature in 2029, carry a 2.00% interest rate, and are aimed primarily at institutional investors. Upstart also implemented capped call transactions, which helped reduce the dilution impact on shareholders by capping the stock conversion price at $70.24 per share MarketScreener Stock Market News Live | Stock Titan Upstart Network, Inc.
Specific figures on how many shares might be issued will depend on the exact amount of debt converted into shares. Still, in the current terms, it is clear that conversion mechanics protect both investors and upstarts from excessive dilution or market instability.
Specifically, in my opinion, this will be great for the company moving forward. As we enter a phase for Upstart, a lower interest rate environment. This benefits their business model tremendously! I believe great things are yet to come! I look for Upstart to increase guidance for the 4th quarter of 2024. And increase guidance for 2025.