Upstart Stock ( NASDAQ:UPST )
Upstart stock ( NASDAQ:UPST ) was down 5% as of 12:09 PM ET on Friday. Upstart Holdings is a fintech lending platform.
Despite the lack of company-specific news, the reduction is presumably the result of two external factors : the higher loan loss reserves taken by other significant banks during this earnings season and the persistent rise in Treasury bond rates.
What’s the Reason?
Similar banking stocks, such as Silicon Valley Bank and American Express, also announced profits for the third quarter today. Upstart stock price probably fell in sympathy. Since Silicon Valley Bank primarily serves the technological and start-up industries, which have seen their values fall and financial activity grind to a stop, the bank’s stock dropped by almost 20%. American Express, however, posted profits above estimates despite a 90% sequential rise in the provision for credit losses.
Since Upstart is also a technology-enabled lending platform, its stock price probably fell when that of Silicon Valley Bank did since the two firms may be traded in the same group by many asset managers. Meanwhile, investors may be worried about Upstart stock, which often works with less creditworthy customers, if premier consumer-oriented banking institutions like American Express are bracing their portfolios for probable loan losses in the next year.
Also, the Federal Reserve keeps hiking rates and selling off more Treasury and mortgage assets because inflation is stubbornly high. This might provide a significant challenge for Upstart, whose lending business is dependent on external finance. Loan purchasers may start pulling back and demanding a higher rate ...
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