More Downside For Upstart Stock?
Upstart Holdings (NASDAQ: UPST), the AI-driven lending platform, has witnessed another sharp stock drop, falling over 55% from February highs of nearly $90 to under $40 currently. For shareholders, this turbulent ride is all too familiar—echoing the company's staggering 96% plunge during the 2022 inflation shock. If you're seeking upside with lower volatility than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and delivered over 91% returns since inception.
Trefis
Upstart's main business model—linking borrowers and lenders via its AI platform—faces a significant hurdle: its vulnerability to interest rate shifts. Higher rates typically reduce loan demand, thereby impacting revenue.
This sensitivity has shown up in the company's recent financial results:
Evaluating Upstart's financial health offers a mixed view:
Several external risks weigh on Upstart's near-term outlook:
At a price-to-sales ratio of 5.5x, Upstart trades above the S&P 500's 2.8x, though it's consistent with its three-year average. This suggests that investors are still expecting significant growth despite headwinds.
Though the stock is far below its recent highs, caution is advised. A combination of macro uncertainty, lack of profitability, and a relatively high valuation leaves limited margin for error.
Recent revenue growth shows that Upstart's AI lending model can thrive in low-rate environments, but the business remains highly exposed to broader economic cycles and credit market disruptions.
For investors, the key question isn't whether Upstart can grow in ideal conditions—it clearly can—but whether it can build the resilience to withstand downturns without the extreme volatility seen in its stock.
Holding on to a declining stock is never easy. Trefis collaborates with Empirical Asset Management—a Boston-based wealth manager whose strategies produced gains even during the 2008-09 crisis when the S&P 500 fell over 40%.
Empirical uses the Trefis HQ Portfolio in this asset allocation framework to help clients achieve better returns with lower risk, as evidenced by the HQ Portfolio performance metrics.
Investors hoping for a soft landing may wonder—how bad could it get in a downturn? Compare the last six market crashes here.
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US stocks gained on Monday while oil prices gained, as markets calculated Iran's next move after the US entered the Middle East conflict by striking its nuclear sites. The Dow Jones Industrial Average (^DJI) edged up 0.4%. The S&P 500 (^GSPC) gained 0.5%, while the tech-heavy Nasdaq (^IXIC) rallied 0.4% Stocks climbed into positive territory on the heels of President Trump's decision to join Israel's attacks on Iran on Saturday. Investors are on edge over a shock surge in energy prices if Iran blocks the key Strait of Hormuz waterway, as that would have repercussions for economies worldwide. Trump said late Saturday that the US had struck Iran's three main nuclear enrichment facilities, saying the sites had been "totally obliterated" — a claim that has since been questioned. He threatened Iran with more attacks if the country did not quickly seek peace talks. The focus now is on Iran's next step — both militarily and diplomatically. 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Defense stocks were modestly higher Monday during premarket trading after the US bombed three Iranian nuclear facilities over the weekend. Palantir (PLTR), Lockheed Martin (LMT), and Northrop Grumman (NOC) rose less than 1%, while RTX (RTX) climbed 1.3%. Palantir supplies AI-fueled defense tech to Israel, which has prompted blowback from former employees and protesters. The other three companies supply weapons to Israel through their contracts with the US government. The defense stocks had jumped immediately after Israel's first airstrikes on Iran on June 12, but only RTX has sustained notable gains of 4% since those strikes. Lockheed Martin is up 0.3% over that time frame, while Northrop Grumman is roughly flat (up 0.1%). Palantir has risen 1.6%. Jefferies (JEF) analyst Mohit Kumar wrote Monday, 'Market is now waiting to see how Iran reacts …However, we are not fully convinced around the market's sanguine reaction.' 'Defence has been one area that we have been bullish on, and we continue to maintain our overweight exposure,' he added. 'NATO countries have moved to increase defense spending with a long term goal of taking to 5% of GDP. We are typically skeptical of long term goals as goal posts do change, but it is also clear to us that defense spending needs to increase globally and not just for NATO countries.' Energy stocks rose alongside rising oil prices in premarket trading on Monday while overall stock futures wobbled. Those with oil production in the US and outside the Middle East caught a bid as investors weighed the possibility of further disruption to the oil supply following the US strikes on Iran. The Energy Select Sector SPDR Fund (XLE) advanced 0.6% and has risen 6% in the past month. Here's a look at how trending energy stocks are trading this morning: View more trending tickers here. Yahoo Finance's Jennifer Schonberger reports: Read more here. 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Here's what Goldman's team estimates: "If oil flows through the Strait of Hormuz were to drop by 50% for one month and then were to remain down 10% for another 11 months, we estimate that Brent would briefly jump to a peak of around $110." Read more here on Goldman's scenarios. Gold pushed higher with the world in limbo as the US joined Israel's attack on Iran over the weekend. No formal response has been issued by Iran, with wider fallout expected. Spot gold climbed 0.2% to $3,375.04 an ounce taking it to within $125 of its record high as investors sought safe-haven assets in a tumultuous economic situation. Gold then sank 0.5% despite broader haven demand. Bloomberg reports: Read more here. Wall Street is closely watching escalating tensions in the Middle East after President Trump confirmed that the US launched a surprise strike on Iran's nuclear sites late Saturday, marking the country's official entry into the two-week-old conflict. 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"It has been and remains our belief that the longer and broader the conflict becomes, the more challenging it could be for US equities," Calvasina added. "These escalations come at a tricky time for US equities, as the S&P 500 has looked fairly valued to us (perhaps a bit overvalued) from a fundamental perspective, with more room to run from a sentiment perspective." The analyst said her three main concerns include: first, the risk that rising national security uncertainty could weigh on equity valuations; second, the possibility that renewed geopolitical tensions could stall the recovery in sentiment that began after the early April tariff lows; and third, the potential for a spike in oil prices, which could fuel inflation concerns. 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Much of the focus has turned to Iran's status as a major oil producer and whether it might seek to close the Strait of Hormuz, through which about one-fifth of the world's oil and gas flows. Iran's parliament reportedly pushed for the strait's closure, though it left the ultimate decision up to Iran's top national security body. That may be by design, as Yahoo Finance's Ben Werschkul details: Read more here. Futures tied to the S&P 500 (ES=F) fell 0.6%. (NQ=F) futures dropped 0.7%. Dow Jones Industrial Average futures (YM=F) lost around 0.6%. Oil, both Brent (BZ=F) and WTI, rose over 3%. Erreur lors de la récupération des données Connectez-vous pour accéder à votre portefeuille Erreur lors de la récupération des données Erreur lors de la récupération des données Erreur lors de la récupération des données Erreur lors de la récupération des données
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