We are investigating whether Upstart Holdings, Inc. (ticker: UPST) (“Upstart”) has violated federal securities laws.
If you suffered losses as a result of recent drops in the price of UPST, and have questions about your legal rights, please contact us using the form below to discuss your options at no charge.
The deadline to apply to serve as lead plaintiff in a securities class action lawsuit now pending against Upstart is July 12, 2022.
Why is there an investigation?
On May 9, 2022, after the markets closed, Upstart cut its 2022 guidance and disclosed that it was holding some loans on its balance sheet.
On this news, Upstart’s stock plunged 57% in trading on May 10, 2022, from a close of $77.13 on May 9, 2022, to a close of $33.61 on May 10, 2022.
The news also triggered analyst downgrades. Stephens analyst Vincent Caintic pointed out that Upstart has originated loans on its balance sheets that it hasn’t been able to transfer to its funding partners, causing him to downgrade the stock to Underweight from Equal-Weight and slash his price target to $28 from $124. “This breaks the thesis for us of a marketplace lender, which is supposed to originate on the behalf of funding partners,” the analyst wrote in a note to clients.
Citi analyst Peter Christiansen downgraded Upstart to Neutral and chopped the price target to $50 from $180, as the company’s artificial intelligence appears to take “time to adjust to deteriorating macro” conditions, the analyst wrote. “Key questions now are (i) will consumer credit worsen vs. pre-COVID, (ii) will funding sources temper their appetite, and (iii) did Upstart cut its outlook enough?” He also noted that the use of its balance sheet to park some loans “raises an eyebrow.”