Upstart Holdings Inc. has capitalized on Wall Street’s artificial-intelligence fervor this year, but it can’t shake a sluggish lending market. The stock’s roaring 2023 rally was set to cool Wednesday, with Upstart shares
UPST,
-33.00%
off 24% in morning action after surging nearly 300% on the year through Tuesday’s close, as the company, which uses artificial intelligence to inform lending decisions, indicated it expected tough business conditions to persist.
The stock was on track for its third-largest single-day percentage decline on record and its worst since it fell 56.4% on May 10, 2022.
Citi Research analyst Peter Christiansen noted that while the company posted largely in-line results for the latest quarter, he’s concerned about Upstart’s “reliance on repeat borrowers” and its continued funding challenges, as the company had to invest $40 million to support $800 million of funded principal in the second quarter. “To that end, we remain bearish on the stock near-term, believing that higher interest rates (effectively pushing potential borrowers above the national cap), cumulative inflation, and the (gradual) return of student loan payments portend that non-prime lending fundamentals could get worse from here,” Christiansen wrote, as he kept a sell rating and $15 target price on the stock. See also: Marqeta scores long-awaited Cash App renewal, and its stock is surging Wedbush analyst David Chiaverini also called out Upstart’s need to invest to help secure funded principal. “Upstart co-invested $40 million in 2Q which could eventually …
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UPST,
-33.00%
off 24% in morning action after surging nearly 300% on the year through Tuesday’s close, as the company, which uses artificial intelligence to inform lending decisions, indicated it expected tough business conditions to persist.
The stock was on track for its third-largest single-day percentage decline on record and its worst since it fell 56.4% on May 10, 2022.
Citi Research analyst Peter Christiansen noted that while the company posted largely in-line results for the latest quarter, he’s concerned about Upstart’s “reliance on repeat borrowers” and its continued funding challenges, as the company had to invest $40 million to support $800 million of funded principal in the second quarter. “To that end, we remain bearish on the stock near-term, believing that higher interest rates (effectively pushing potential borrowers above the national cap), cumulative inflation, and the (gradual) return of student loan payments portend that non-prime lending fundamentals could get worse from here,” Christiansen wrote, as he kept a sell rating and $15 target price on the stock. See also: Marqeta scores long-awaited Cash App renewal, and its stock is surging Wedbush analyst David Chiaverini also called out Upstart’s need to invest to help secure funded principal. “Upstart co-invested $40 million in 2Q which could eventually …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]