Why Upstart Stock Gained 11% in November
Upstart Holdings (NASDAQ: UPST) stock moved 11% higher in November, according to data from S&P Global Market Intelligence. Its business is highly affected by interest rate trends, and the Federal Reserve paused rate increases and signaled that it felt the current policy was working in curtailing inflation without bringing about a recession. That led many experts to believe the Fed might even begin to cut rates soon.
Upstart has been having a rough time since inflation started to balloon and the Fed began to raise rates. It runs a credit evaluation platform, and the loan industry has been hit hard, since higher rates mean fewer people can afford to take out loans. It also means there are going to be higher default rates. Since Upstart's entire premise rests on identifying borrowers who are less likely to default, it's not able to approve applications at the same degree as when interest rates are low.
In the 2023 third quarter, revenue declined 14% from last year, and net loss was $43 million, an improvement from $58 million last year. Loan volume decreased 34% from last year to $1.2 billion.
Source Fool.com
