Shares of Upstart shine in 2021, but other Columbus startups struggle in the stock market

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While the U.S. stock market performed well in 2021, share prices of Columbus-area public companies ranged widely.

A young company new to Columbus turned in a sterling stock performance in 2021.

It was a tougher story, however, for two other young companies with Columbus ties that have recently gone public.

Upstart, founded in 2012, uses artificial intelligence and machine learning to automate the borrowing process. The goal is to improve access to credit while reducing the risk and costs of lending for Upstart’s bank and credit union partners.

The company is based on the West Coast, but has its largest office and second headquarters in Columbus.

The company went public at the end of 2020 and its shares climbed for much of 2021, rising 271.3% for the year.

At one point, shares topped, making it one of the region’s most valuable companies, before falling at the end of the year. Even after the drop, the company’s market capitalization is more than $9 billion.

“Since going public a little more than a year ago, Upstart has grown tremendously – in revenue, profits, even in the number of employees in our Columbus headquarters,” said Sanjay Datta, Upstart’s CFO.

“By almost any measure, Upstart has been one of the best performing (initial public offerings) in tech or finance in recent years, thanks in large part to the talent and dedication of Upstart employees.”

Columbus business news: Upstart, Original Bark Co. to add 500 jobs apiece

Startups Root and Bark suffer in 2021 stock market

Meanwhile, shares of two other young public companies, Bark and Root, tumbled sharply in 2021.

Root, the Columbus-based auto insurer, saw its shares fall 80% in 2021, dropping steadily throughout the year. Like Upstart, the company went public at the end of 2020.

Bark, best known for its monthly dog toy and treat service called BarkBox, has seen its shares fall since they began trading in June, dropping 73.6% by the end of the year.

Bark, based in New York City, has its customer service and other operations in Columbus.

The two joined other young, fast-growing, but unprofitable companies that saw their shares drop in 2021 as investors turned their attention more to established companies.

Established retailers have good 2021

Overall, despite COVID-19, stock market indices had another strong year last year, building on the big gains of 2020.

The Standard & Poor’s index of the 500 biggest public companies rose 26.9% and the tech-heavy NASDAQ jumped 18.7%. The Dow Jones Industrial Average, made up of 30 large companies, climbed 21.4%.

“In 2021, everything lined up nicely,” said Greg McBride, chief financial analyst for the financial website Bankrate.com. “Low interest rates, a strong economic rebound, continued declines in unemployment, a robust consumer, all of that led to strong corporate profits that underpin stock prices.’’

Stocks in Greater Columbus retailers, banks and companies tied to housing did well in 2021, in some cases rebounding after a weak 2020 when the economy was largely shut down in the early days of the coronavirus.

Designer Brands, operator of Designer Shoe Warehouse, posted an 85.3% gain last year. Shares of Abercrombie & Fitch jumped 71% and shares of Express tripled in 2021 after they sank below a dollar in 2020.

L Brands split in two in August, becoming Bath & Body Works and Victoria’s Secret. Shares of Victoria’s Secret rose 14.9% from the split through the rest of the year while shares of Bath & Body Works increased 8.2%.

Not everything was great for retail in 2021.

Washington Prime Group, the operator of Polaris Fashion Place and other malls, is no longer a public company after the mall operator filed for bankruptcy and emerged as a private company.

Banks, housing and insurance go higher

Shares of homebuilder M/I Homes jumped 40.4% and shares of Installed Building Products, which installs insulation and other building products, jumped 37.1%

Shares of Huntington Bancshares, Heartland BancCorp and Newark-based Park National all moved higher in 2021 with Park shares jumping 30.8%.

Bank shares suffered early in the pandemic out of concern that the pandemic would usher in a wave of loan defaults, McBride said. With interest rates expected to rise this year and the economy doing well, bank shares should continue to do well.

“Housing is going gangbusters,” he said. “Low interest rates and with demand far exceeding supply, the stars aligned for housing in 2021.”

Retailers rebounded in 2021, helped by a strong labor market and after stores were shut down for a big chunk of 2020 because of COVID-19, McBride said.

Another big winner among local companies last year was State Auto Financial. Shares of the insurer nearly tripled after the it announced that it was being sold to Liberty Mutual. The deal is expected to close in coming months.

McBride believes stocks will have a tougher road in 2022, especially young companies with a promising technology or service that haven’t turned a profit yet.

The Federal Reserve is expected to start raising interest rates this year and pull back on other programs that have helped keep interest rates low.

“Established profitable companies will continue to thrive,” he said. “But those with valuations that benefited from ultra-low interest rates and a wave of liquidity that don’t have the fundamentals are likely to have a much rougher ride.”

mawilliams@dispatch.com

@BizMarkWilliams

Columbus businesses’ 2021 stock performance

Prices are as of the close on Dec. 31. Excludes dividends. Standard & Poor’s index of the 500 biggest public companies rose 26.9%.

Abercrombie & Fitch 71.1%

Advance Drainage 62.9%

American Electric Power 6.8%

Bark -73.6%

Bath & Body Works* 8.2%

Big Lots 2.9%

Cardinal Health -3.9%

Commercial Vehicle -6.8%

Core Molding -34.1%

Designer Brands 85.3%

Diamond Hill 29.3%

Express 238.5%

Greif 28.8%

Heartland BancCorp 9.6%

Huntington Bancshares 22.1%

Installed Building Products 37.1%

Lancaster Colony -8.2%

M/I Homes 40.4%

Park National 30.8%

Root -80.3%

Rocky Brands 41.8%

Scotts Miracle-Gro -19.2%

State Auto Financial 191.4%

Upstart 271.3%

Victoria’s Secret* 14.9%

Wendy’s 8.6%

Worthington Industries 6.5%

*-Shares of Bath & Body Works and Victoria’s Secret began trading as separate companies on Aug. 3.

Source: Dispatch research

This article originally appeared on The Columbus Dispatch: How did Columbus companies’ stock do in 2021?