What Happened?
Shares of AI lending platform Upstart (NASDAQ: UPST) fell 11.3% in the afternoon session after the successful stock market debut of "buy now, pay later" company Klarna (KLAR) created pressure on fintech peers.
Klarna, a major competitor in the online lending space, began trading with its stock opening at $52, significantly above its initial public offering (IPO) price of $40 per share. The buzz around Klarna's strong debut appeared to weigh on the broader fintech sector, with shares of competitor Affirm Holdings (AFRM) also facing pressure. This market reaction suggests potential investor concerns about increased competition for capital and market share.
The shares closed the day at $62.42, down 9.4% 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. But moves this big are rare even for Upstart and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 8 days ago when the stock dropped 4.6% on the news that the major indices continued to retreat (Nasdaq -1.5%, S&P 500 -1.2%) amid profit-taking and renewed concerns about tariffs. Investors reacted to a federal court ruling that most of President Trump's global tariffs were illegal, raising uncertainty over trade policy and the fiscal impact of potential refunds. Rising Treasury yields added to the pressure, with the 10-year climbing above 4.2% and the 30-year nearing 5%, intensifying worries about stretched equity valuations. September's historically weak track record for stocks further dampened sentiment, leaving traders cautious ahead of the jobs report later in the week and the Federal Reserve's upcoming rate decision.
Upstart is up 2.6% since the beginning of the year, but at $62.40 per share, it is still trading 29.7% 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 $2,117.
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