What Happened?
Shares of aI-powered lending platform Upstart (NASDAQ:UPST) fell 8.5% in the afternoon session after the Nasdaq dropped 1.3%, marking its fourth consecutive day of losses, as concerns over the tech sector continue to mount. The downturn appears to be most pronounced in stocks heavily exposed to the AI market, with traders growing uneasy about stretched valuations and potential slowdowns in AI-related spending.
Adding to the pressure, a lack of positive economic data has fueled broader uncertainty about the U.S. economy, particularly regarding consumer confidence and corporate investment trends.
Investors are looking ahead to Nvidia's earnings report tomorrow, as the semiconductor giant is expected to provide crucial insights into AI demand and broader tech infrastructure spending. Given Nvidia's dominance in AI chips, its performance could set the tone for the entire sector.
Separately, the trade debates are back after President Trump announced that the tariffs on Canada and Mexico will "go forward" when the temporary suspension expires in the coming week. This sparked fresh worries about supply chain issues and rising costs for companies that depend on cross-border trade, leading analysts to rethink the economic impact on affected industries.
Markets remain volatile as investors await clarity on these key issues, with upcoming earnings and policy updates likely to shape sentiment in the days ahead.
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 The Market Is Telling Us
Upstart’s shares are extremely volatile and have had 66 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 13 days ago when the stock gained 32% on the news that the company reported an insanely good quarter. For starters, it demolished analysts' revenue, EPS, and adjusted operating income expectations. Growth was driven by a 68% increase in loan originations, reaching $2.1 billion, as the company benefited from improved demand and conversions. On top of that, its revenue and EBITDA guidance for next quarter beat Wall Street's estimates by a huge margin. Additionally, the company will host "Upstart AI Day" on May 14, 2025, to showcase its latest artificial intelligence offerings, a timely move as AI remains one of the hottest trends in tech. Overall, this was an impressive quarter for the company.
Upstart is up 10.6% since the beginning of the year, but at $67.26 per share, it is still trading 24.2% 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 $2,282.
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