What happened

Shares of artificial intelligence-powered fintech provider Upstart (UPST 0.71%) got shook up on Tuesday, down 10% as of 3 p.m. EDT after investment bank Jefferies revoked its buy rating on the stock and downgraded Upstart to hold.

So what

Jefferies doesn't hate Upstart stock. In fact, the analyst forecasts "consistent growth from '23 to '25" for the company's personal loan business, reports StreetInsider.com, citing "strong momentum and insatiable investor demand." But with Upstart shares up more than 700% this year alone, Jefferies is concerned that this rally has gotten a bit overheated.

The analyst also worries that at present valuations -- it has a $25 billion market cap -- Upstart's stock price already "reflects strong and successful market penetration in the personal and auto loan categories over the next few years." That leaves little room for upside in the stock even if, as the analyst forecasts, Upstart goes on to capture an astounding 40% market share of personal loan originations in the U.S., and a 7% market share in automotive loans.

Chalkboard drawing of stock chart arrow going up being erased and pointing back down.

Image source: Getty Images.

Now what

Even assuming all of this happens as planned, Jefferies finds itself hard-pressed to value Upstart at more than $330 a share (about 2% more than what the stock costs today), and even that valuation "represents an optimistic market share capture scenario, leaving little room for upside."

On the plus side, though, well...did I mention that Upstart shares have already gained 700% this year? Maybe it's time for investors to count their winnings -- and count themselves lucky for the profits they've already earned.