What Happened?
Shares of AI lending platform Upstart (NASDAQ: UPST) fell 3.1% in the afternoon session after a report from Jefferies highlighted a significant increase in short interest for the AI lending platform. The analysis showed that bets against the company rose to 27.7%, the largest increase in its sector.
A rise in short interest indicated that more investors were betting the stock's price would go down. This company-specific news was made worse by a wider market slump. Broader market weakness followed comments from the Fed Chairman, who expressed concerns that asset prices, particularly in the stock market, appeared to be highly overvalued. This dented investor sentiment and contributed to the downward pressure on stocks.
The shares closed the day at $60.61, down 2.8% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Upstart? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Upstart’s shares are extremely volatile and have had 73 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 14 days ago when the stock dropped 11.3% on the news that 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.
Upstart is down 0.3% since the beginning of the year, and at $60.60 per share, it is trading 31.7% 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 $2,056.
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