What happened?
Shares of AI lending platform Upstart (NASDAQ:UPST) rose 17.5% in the morning session after a Wedbush analyst upgraded the stock’s rating from Underweight (Sell) to Neutral and raised the price target from $10 to $45. The analyst believes that the current price offers a balanced risk/reward. Several factors support this view, including “improving credit quality metrics, lower interest rates and an improving Upstart Macro Index, which could drive a positive turnaround in production and adjusted EBITDA in the second half of 2024.”
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What the market tells us
Upstart’s stock is extremely volatile, having seen 70 moves of more than 5% in the past year. But such big moves are rare even for Upstart and indicate that this news has had a significant impact on the market’s perception of the company.
The previous big move we wrote about was 28 days ago, when the stock price fell 9.8% on news that the company announced plans to offer $300 million of Convertible Senior Notes due 2029 to qualified institutional buyers. The stock likely fell due to concerns about the dilutive effect of the notes, which can be converted into shares of the company’s common stock, increasing the total number of shares.
Upstart is up 41.4% since the beginning of the year, hitting a new 52-week high at $54.96 per share. Investors who bought $1,000 worth of Upstart stock at its IPO in December 2020 would now be looking at an investment worth $1,862.
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