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• Upstart share price suffered a harsh reversal in the past 2 days.
• The stock has dropped by double-digits from the year-to-date high.
• The company will publish its financial results on Tuesday.

Upstart (Nasdaq: UPST) stock price has been punched in the face in the past two days as investors reposition for the upcoming earnings. The shares plunged by more than 14% on Monday, adding to Friday’s 7% decline. 
 

Upstart earnings preview

Upstart share price will be in the spotlight on Tuesday as the company is set to publish its quarterly results. These results will be watched closely because of the stock’s strong comeback in the past few months.

At its peak last week, Upstart’s shares were up by more than 500% from their lowest level this year. Its market cap has jumped to over $5 billion, which is a strong number for a company that was on the verge of collapsing.

Upstart shares jumped after the company published the last financial results. It also hinted that it was embracing artificial intelligence in making its lending decisions. This year, most companies with an AI angle.

Analysts are optimistic about the company’s results. In a recent note, analysts at BTIG said that they were optimistic about the company’s performance in Q2. They expect the shares will rise to $72. Their report said:

“We model our rate request assumptions based on a rebound in web traffic volume seen during 2Q, and assume a 10% conversion rate, modestly higher than the prior quarter, but far lower than historical averages,”

Analysts expect that Upstart’s revenue in the second quarter from $102 million in Q1. It brought in over $225 million in the same quarter in 2022. Therefore, the decline will be understandable because of the changing business conditions. Upstart has a mixed record of beating analyst estimates.

Analysts have mixed opinions about Upstart’s business. For example, those at JP Morgan recently boosted their outlook for the stock from $11 to $23 while those at Riley have a hold rating on the stock. 
 

Upstart stock price forecast

(Click on image to enlarge)

UPST chart by TradingView

Making a pre-earnings prediction is not easy, as my recent forecast on PayPal showed, Historically, stocks tend to have some volatility after earnings. This volatility is more common among popular stocks like Upstart.

On the daily chart, we see that the UPST share price suffered a major reversal ahead of the company’s earnings. It remains above the 50-day and 100-day moving averages while the Relative Strength Index (RSI) has drifted downwards.

Therefore, I suspect that the shares will bounce back after earnings since the potential weakness has been priced in by investors. If this happens, the shares will likely retest the important resistance level at $70. A drop below the support at $52.16 will see it retest the crucial support at $40.

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