What Happened:
Shares of AI lending platform Upstart (NASDAQ:UPST) fell 6.85% in the morning session as investors remained on edge ahead of the critical Fed meeting. Despite recent bank failures, the consensus expectation is for the Fed to hike rates by 25bps, tightening economic conditions even further. JP Morgan's recent acquisition of First Republic Bank marked the third collapse of an American bank since March and has added to concerns about the overall health of the banking sector. Fears are mounting that a sector-wide pullback in lending could magnify the rate hikes meant to tame the economy and cause a more pronounced economic slowdown which could negatively impact all sectors from tech to consumer to industrials alike.
What is the market telling us:
Upstart's shares are very volatile and over the last year have had 107 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Upstart is down 5.43% since the beginning of the year, and at $12.18 per share it is trading 87% below its 52-week high of $93.57 from May 2022. Investors who bought $1,000 worth of Upstart's shares at the IPO in December 2020 would now be looking at an investment worth $413.64.
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