Why Upstart (UPST) Shares Are Falling Today

What happened:

Shares of AI lending platform Upstart ( NASDAQ:UPST ) fell 9.8% in the morning session after the company announced plans to offer $300 million in Senior Convertible Notes due 2029 to qualified institutional buyers. Shares are likely down on concerns about the dilutive effect of the notes, which can be converted into the company’s common stock, increasing the total number of shares.

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What the market tells us:

Upstart shares are highly volatile and have had 66 moves of more than 5% in the past year. Against that background, today’s move indicates that the market sees this news as significant, but not something that would fundamentally change its perception of the business.

The biggest move we’ve written about in the past year was about a month ago, when the stock gained 48.9% on news that the company reported Q2 earnings results. Revenue, adjusted operating income and EPS all beat analysts’ estimates.

Upstart provided revenue guidance and an upbeat outlook for the next quarter that beat analysts’ expectations. Management attributed the improved sentiment to advances in its AI models. Moving on, this was an impressive quarter that should please shareholders.

Upstart is down 6.7% year-to-date, and at $36.27 a share is trading 23.3% below its 52-week high of $47.31 dated December 2023. Investors who bought shares of Upstart worth $1,000 at the December 2020 IPO would now follow Look at an investment worth $1,229.

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