May 10 (Reuters) – Shares of Upstart Holdings (UPST.O), which was heavily short-sold, rose in premarket trading on Wednesday after an artificial intelligence-driven lending market secured an additional $2 billion in funding. It surged 32% on Friday, crowding out bearish investors.
The San Mateo, Calif.-based company, which leverages AI to rapidly verify and process loans, said it will receive capital from new and existing partners over the next 12 months to help it weather the economic downturn. rice field.
Upstart stocks have lost 82% of their value over the past 12 months as demand for new loans plummeted amid high interest rates and fears of a slowing economy.
“The committed financing deal is a tangible step toward stabilizing Upstart’s business,” said Morgan Stanley analyst James Fawcett, with a $10 to $13 price target on the stock. raised to
But Fawcett cautioned of future risks related to uncertain economic conditions, the company’s historically troubled credit track record and lack of profitability prospects.
Wall Street has a bearish view of the company, with an average Sell rating for the 14 brokerages that cover the stock, but a median price target of $11.50, or 18.4% from the stock’s closing price. This suggests that there is a lower value for
At current levels, short sellers would lose about $122 million, according to analytics firm Ortex. About 37.5% of the float is in short positions as of May 8.
Ortex co-founder Peter Hillerberg said, “With Upstart prices skyrocketing more than 30% ahead of the market, some short-sellers will look to close their positions…buying pressure on equities. will rise further,” he said.
An influx of demand from short-sellers trying to break out of their bearish bets on rising stock prices pushes the price further and creates a short squeeze.
Excluding items, the company posted a net loss of 47 cents per share, according to Refinitiv, beating analysts’ expectations for a loss of 81 cents per share.
Reported by Meda Singh, Bangalore.Editing: Saumyadeb Chakrabarty
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