Over the past year, Upstart (NASDAQ: UPST) has dealt with concerns about who would buy its loans. Castlelake, a global alternative investment manager, helped alleviate some of these worries when it promised to buy as much as $4 billion in consumer loans from Upstart in May. This vote of confidence triggered a rally of epic proportions, with the stock gaining almost 400% since its May low of $12, although it has since retreated a bit. Upstart is a promising company with a bright future, but should investors consider taking some of their profits off the table now?
There's no question about it: Upstart (NASDAQ: UPST) has been one of the biggest winners on the stock market this year. Upstart will face its next test when it reports second-quarter earnings on Aug. 8, and the stock may swing wildly on the news, given its historical volatility, the soaring gains this year, and the high number of shares sold short by investors betting on a decline. The company's own forecast calls for a sequential increase in revenue from the first quarter, but a sharp drop from Q2 2022, when interest rates were much lower and consumer demand for loans was stronger.
Shares of LendingClub (NYSE: LC) were falling today after the peer-to-peer lending platform posted disappointing guidance in its second-quarter earnings report, even as its results topped headline estimates. LendingClub, which leverages a digital interface and AI technology to offer personal loans and banking services, continued to see sharp declines in its business in the second quarter. LendingClub also saw its balance sheet shrink, in line with its strategy of allowing brokered deposits to mature.