Why Upstart Dropped 16% in October
Shares of Upstart Holdings (NASDAQ: UPST) stock sank 16% in October according to data provided by S&P Global Market Intelligence. The artificial intelligence (AI) consumer lending stock has been plagued by plunging sales and high losses, and investors are gearing up for an update.
It's been a rough two years for Upstart. The lending platform, which uses an AI-based model to assess credit risk, has been crushed under the weight of increased interest rates. Not only are fewer people looking for loans when interest rates are the highest they've been in years, making it challenging for borrowers to take a loan and make their payments, but Upstart's system also approves fewer loans for the same reason -- there is naturally a higher risk of default under these circumstances.
Over the past few quarters, sales have plunged and net losses have expanded. However, Upstart's stock soared earlier this year when the company provided an update that it had secured $2 billion in long-term funding for its loans. Investors are looking toward the future, and this means Upstart is well positioned to stay alive and bounce back, and it could in a big way. At the current price, it could be considered a bargain when measured against future opportunities.
Source Fool.com
