While the broader market has struggled with the S&P 500 down 5.2% since October 2024, Upland has surged ahead as its stock price has climbed by 8.3% to $2.35 per share. This performance may have investors wondering how to approach the situation.
Is now the time to buy Upland, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
We’re glad investors have benefited from the price increase, but we're cautious about Upland. Here are three reasons why you should be careful with UPLD and a stock we'd rather own.
Why Do We Think Upland Will Underperform?
Founder Jack McDonald’s second software rollup, Upland Software (NASDAQ:UPLD) is a one stop shop for sales and marketing software, project management, HR, and contact center services for small and medium sized businesses.
1. Revenue Spiraling Downwards
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, Upland’s demand was weak and its revenue declined by 3.1% per year. This was below our standards and is a sign of poor business quality. 
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Upland’s revenue to drop by 12.2%, a decrease from its 3.1% annualized declines for the past three years. This projection is underwhelming and implies its products and services will face some demand challenges.
3. Long Payback Periods Delay Returns
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
Upland’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a highly competitive environment where there is little differentiation between Upland’s products and its peers.
Final Judgment
Upland falls short of our quality standards. With its shares topping the market in recent months, the stock trades at 0.3× forward price-to-sales (or $2.35 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment. Let us point you toward a dominant Aerospace business that has perfected its M&A strategy.
Stocks We Would Buy Instead of Upland
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
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Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.