UPST - Upstart stock price could crash 45%: BTIG analyst warns

2024-06-07 12:23:46 ET

Upstart (NASDAQ: UPST) stock price is down more than 5.0% on Friday after a BTIG analyst issued a super bearish note against it.

Upstart stock price could tank to $14

Lance Jessurun warned of a sharp decline in the financial tech stock in his research note this morning to $14 which signals potential for a 45% crash.

The analyst is dovish on Upstart stock as the company doesn’t fare well against rivals in the highly competitive credit underwriting market. In fact, it has failed to establish any material benefit over traditional lending, he added.

Without a distinct edge, the operational scale of Upstart Holdings falls miles behind its competitors. Lack of subsidised loans does also put the Nasdaq listed firm at a disadvantage as rivals offer better pricing.

All in all, the BTIG analyst is not entirely convinced that UPST has a strategy and infrastructure adequate to compete with the effectiveness and scalability of other market participants.

Upstart shares are currently down more than 35% versus the start of 2024.

UPST issued weak guidance last month

Upstart stock failed to win optimism from Lance Jessurun today even though its management has recently rolled out new loan products. The lending platform has set up an artificial intelligence certification programme for its executives as well.

BTIG’s bearish call on UPST share price arrives about a month after the company reported its financial results for the first quarter that did top Street estimates. What did not sit well with investors, however, was the guidance.

The California based company expects to report $25 million of adjusted EBITDA loss on $125 million in revenue in Q2. Analysts, in comparison, were at $5.9 million and $145 million, respectively. Dave Girouard – chief executive of Upstart Holdings said at the time:

We continue to focus on improving our efficiency and financial performance while investing responsibly for the long-term. We anticipate a return to sequential growth in H2 and positive EBITDA by the end of the year.

But that isn’t enough for Wall Street to keep a bullish Upstart stock price forecast. Analysts at Mizuho Securities also lowered their price target on the financial technology company to $17 on increasing delinquencies and decline in loan growth.

Note that Paul Gu – its chief technology officer also sold about $378,000 worth of UPST this week which doesn’t bode well for management’s confidence in what the future holds for the company either. Upstart Holdings does not pay a dividend at writing.

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