What Happened?

Shares of aI-powered lending platform Upstart (NASDAQ:UPST) jumped 9.5% in the afternoon session after Redburn Atlantic analyst Simon Clinch upgraded the stock's rating from Neutral to Buy. The analyst added, "Following 3Q24, we observe a clear positive inflection in fundamentals, driven almost entirely by the company's latest AI innovations, which still leaves upside potential from tailwinds related to falling US interest rates.".

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What The Market Is Telling Us

Upstart’s shares are extremely volatile and have had 64 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 a day ago when the stock dropped 13.7% on the news that J.P. Morgan analyst Reginald Smith downgraded some fintech stocks due to growth and valuation concerns. Smith downgraded Upstart from Neutral to Underweight (Sell), adding, "We expect the third-party funding environment to improve in 2025, which appears to be more than priced in at current levels, with shares trading nine times forward sales."

Upstart is up 89.4% since the beginning of the year, but at $73.49 per share, it is still trading 9.3% below its 52-week high of $81 from November 2024. Investors who bought $1,000 worth of Upstart’s shares at the IPO in December 2020 would now be looking at an investment worth $2,493.

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