Shares of Upstart (UPST) traded more than 10% lower on Monday as one Wall Street analyst downgraded the stock.
Upstart is a financial technology company that uses artificial intelligence (AI) to improve credit decision processes and automate lending.
The company’s platform helps banks and other financial institutions to provide personal and auto loans to consumers using non-traditional variables to assess would-be borrowers creditworthiness.
Like other fintech companies in the space, Upstart’s approach makes credit more available to borrowers who might be overlooked by traditional credit scoring methods. The company also reduces risks and costs for lenders.
JP Morgan Downgrades Upstart Shares
On Monday, Upstart shares were downgraded by J.P. Morgan (JPM) from “neutral” to “underweight.”
The downgrade comes despite highs in UPST shares’ price.
JP Morgan’s analysts downgrade reflects their expectations of a challenging funding environment into the next year, although improvements are expected in 2025. The downgrade resulted in one of the worst single-day percentage losses for the company since February.
Upstart stock has seen an impressive rally since the elections results in November.
Since November 4, Upstart stock ran from $50 to $80 in a short two day sprint.
Much of that rally came after the company beat their latest earnings per share and revenue target on November 8.
Shares consolidated following the earnings results as Upstart’s management issued forward-looking guidance that was lower than expectations.
Upstart’s “Buy the Dip” Target Price
Despite the lowered guidance, several upgrades from Wall Street as most analysts expect the company to perform well in 2025.
Today’s downgrade dropped UPST shares to their 20-oday moving average. That technical trendline is likely to provide short-term support, but the stock may see additional selling to the $60 price level.
Should the stock break below $60, Upstart’s 50-day moving average sits ready to provide support at $55 per share. That price could serve as a short-term “buy the dip” entry for many investors.
Shares of Upstart remain in a long-term bull market trend with a price target of $100.
— Chris Johnson
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Source: Money Morning