Thursday June, 23 2023
G. Allan Collins
Upstart (UPST -5.85%) is going through a tough time this week. Their stock price dropped by a whopping 19.9% since last week’s market close, according to S&P Global Market Intelligence. It’s not looking good for the fintech company, and that’s worrying investors.
You know how some people were hoping the Federal Reserve would stop raising interest rates? Well, bad news: they’re not done yet. The head honcho of the Federal Reserve, Jerome Powell, confirmed that they’re planning to raise rates even more this year. And that news caused a lot of companies, including Upstart, to lose a bunch of value. Investors were spooked because they thought rates would stay low, but now they’re realizing that might not be the case.
Upstart had been doing really well lately, with their stock shooting up like a rocket. But now, with all this talk of interest rates going up, it’s no surprise that their stock is taking a hit. Even though they’re down this week, their share price is still up by around 130% for the year so far. That’s pretty impressive. But the thing is, Upstart’s success has a lot to do with the hype around artificial intelligence (AI). They’ve built their business on the idea that AI can help them decide who should get a loan. It’s a cool concept, but it might be tested if things keep getting worse in the economy.
You see, there are a few problems that Upstart is facing right now. First, there’s this thing called inflation, which means prices are going up. Then, the Federal Reserve raising interest rates is making borrowing money more expensive. And to top it all off, people are starting to worry that a recession might be on the way. All of these things together are making it tough for Upstart to keep up the good work. Their fancy AI lending platform might not be able to handle all the challenges that are coming their way.
Upstart’s current situation is a bit of a rollercoaster. Their stock is down by about 92% from its highest point. It’s important to remember that investing in Upstart right now comes with a lot of risks. The economy is unpredictable, and Upstart’s success relies on a lot of things going right.