What Happened?
Shares of AI lending platform Upstart (NASDAQ: UPST) jumped 3.5% in the afternoon session after a BofA analyst raised the firm's price target and pointed to strong monthly loan origination data.
The analyst increased the price target on Upstart to $37 from $36, while keeping a Neutral rating, after noting that May originations rose 14% month-over-month and 52% year-over-year. This positive data prompted the firm to raise its estimates for second-quarter origination volume as well as its earnings per share forecasts for 2026 and 2027. The positive sentiment is consistent with a general analyst consensus rating of “Buy” and expectations for a significant recovery in earnings per share through the rest of 2026.
After the initial pop, the shares cooled down to $30.81.
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What Is The Market Telling Us
Upstart’s shares are extremely volatile and have had 62 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 3 days ago when the stock dropped 8% on the news that a stronger-than-expected jobs report signaled that the Federal Reserve may keep interest rates higher for longer.
The U.S. economy added 172,000 nonfarm payroll jobs in May, significantly surpassing economists' expectations of around 85,000, while the unemployment rate held steady at 4.3%. This robust labor market data eases concerns of an economic slowdown but diminishes the likelihood of near-term interest rate cuts by the Federal Reserve.
A prolonged high-interest-rate environment can create headwinds for growth-oriented sectors like technology, as it pressures stock valuations by making future earnings less valuable in the present. As a result, investors recalibrated their expectations for a 'higher-for-longer' rate scenario.
Upstart is down 32.8% since the beginning of the year, and at $30.81 per share, it is trading 63.4% below its 52-week high of $84.13 from July 2025. Investors who bought $1,000 worth of Upstart’s shares 5 years ago would now be looking at only $190.18.
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