Upstart Holdings, the AI-driven lending marketplace, experienced a surge in trading on Wednesday as its shares soared 32%.
The rally came on the heels of the company securing an additional $2 billion in funding, which instilled confidence in investors and squeezed out bearish traders.
The San Mateo-based firm plans to receive the capital from both new and existing partners over the next year to help navigate the challenges posed by an economic slowdown.
Despite recent struggles, including an 82% drop in share value over the past year due to waning loan demand and economic uncertainty, the committed funding agreements are seen as a significant step toward stabilizing Upstart's business, according to analysts.
With Wall Street taking a bearish stance on Upstart, the stock carries a "sell" rating from the 14 brokerages covering it, with a median price target of $11.50. Furthermore, short sellers face potential losses of approximately $122 million, leading to speculation of a short squeeze and the possibility of additional buying pressure.
Despite these challenges, Upstart exceeded analyst expectations by reporting a net loss per share of $0.47, outperforming the estimated $0.81 loss per share.
Contact Angela at angela@proactiveinvestors.com
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