What Happened?
Shares of AI lending platform Upstart (NASDAQ: UPST) jumped 4.2% in the morning session after a director and the company's Chief Technology Officer reported a significant purchase of 100,000 shares of company stock. The transaction, detailed in a regulatory filing, was viewed by investors as a strong vote of confidence from a key executive. Such a substantial purchase often suggested that the company's leadership believed in the firm's future prospects and saw the stock as undervalued. This move signaled to the market that those with inside knowledge of the company's operations were optimistic about its direction.
After the initial pop the shares cooled down to $39.08, up 4.8% from previous close.
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What Is The Market Telling Us
Upstart’s shares are extremely volatile and have had 74 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 23 hours ago when the stock dropped 6.1% on the news that investors showed signs of fatigue with the AI-led rally, rotating out of high-valuation growth names.
After a fantastic run, many of the high-flying AI and technology stocks saw investors take profits: selling shares to lock in their gains. This is often called a "market rotation." Money is moving out of the red-hot tech sector (which some worry has become too expensive) and into other parts of the market that investors may currently deem more stable or reasonably-priced. There's a secondary reason for the cautious mood: The long government shutdown came to an end. Though it's typically interpreted as good news, it also means a flood of delayed economic reports will be released. For weeks, investors were "flying blind" without key updates on the economy's health, like inflation data and the jobs report. In typical "sell the news" fashion, investors may also be taking profits and selling in anticipation that the new data would potentially give the Federal Reserve reasons to slow or even pause future rate cuts.
Upstart is down 35.7% since the beginning of the year, and at $39.08 per share, it is trading 56% below its 52-week high of $88.77 from February 2025. Investors who bought $1,000 worth of Upstart’s shares at the IPO in December 2020 would now be looking at an investment worth $1,326.
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