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Investing.com - Morgan Stanley has highlighted mixed performance metrics for Upstart Holdings (NASDAQ:UPST), which has seen its stock decline over 16% in the past week. According to InvestingPro data, the fintech lender continues to face challenges related to its near-prime and subprime lending focus, though analysts expect net income growth this year.
The investment bank’s analysis of recent Upstart ABS trust performance data revealed higher delinquencies for August on a weighted average basis, with 30+ day delinquencies increasing 49 basis points month-over-month and 60+ day delinquencies rising 41 basis points month-over-month.
Despite the monthly increases, Morgan Stanley noted that delinquencies are still declining year-over-year, down 242 basis points and 212 basis points respectively, with some of the monthly rise potentially attributed to a higher percentage of trusts in steeper portions of the delinquency curves.
The firm observed that while 2025 trusts appear to be performing slightly worse compared to 2024 trusts, and in turn worse than 2020/2021 vintages, performance remains better than the 2022/2023 period, suggesting some improvement in underwriting quality.
Morgan Stanley acknowledged Upstart’s efforts to shift toward super-prime borrowers, which represented 26% of originations in the second quarter of 2025, but emphasized that the company "still remains a near- and subprime lender, which makes the comparison to prime lenders challenging and tougher to extrapolate."
In other recent news, Upstart Holdings has been under increased scrutiny following a report from BTIG, which noted a rise in loan delinquencies within the company’s asset-backed securities portfolio. According to BTIG, delinquencies for loans over 30 days increased to 6.2% in August, up from 6.1% in July and 5.4% in June, particularly impacting older loan vintages. Despite this, JPMorgan has upgraded Upstart’s stock rating from Neutral to Overweight, even though it slightly reduced the price target to $88.00 from $93.00. The upgrade comes amid concerns about balance sheet growth and a new convertible issuance.
In another development, Upstart has announced the pricing of $600 million in 0% Convertible Senior Notes due 2032, an increase from the previously planned $500 million. These notes will be convertible into common stock at a rate equivalent to a conversion price of approximately $82.50 per share. Additionally, Upstart has partnered with ABNB Federal Credit Union to expand personal loan offerings through artificial intelligence technology. This partnership allows qualified applicants to access loans via a branded digital experience.
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