What happened
Shares of the artificial intelligence lending platform Upstart Holdings (UPST +3.83%) plummeted this morning after an analyst downgraded the company's stock and drastically cut his price target for its shares.
The tech stock was down by 9.1% as of 11:38 a.m. ET.
So what
Morgan Stanley analyst James Faucette downgraded Upstart's shares from equal weight to underweight and slashed his price target for the stock from $88 down to $19.
Image source: Getty Images.
Faucette mentioned in an investor note that the company's underwriting performance is "deteriorating" and that his view of the company is now "incrementally negative," according to TheFly.com.
Today's comments from Faucette add to a general pessimism that some investors have had toward Upstart over the past year.
Investors have become increasingly concerned that high inflation, mixed with the Federal Reserve's response to it by hiking interest rates, is creating a difficult environment for Upstart's lending business.
Other tech stocks have felt the same negative investor sentiment, but for Upstart in particular it's resulted in the tech stock falling 74% over the past 12 months.
Now what
Unfortunately, it's likely that there's more share price volatility in store for Upstart investors. With inflation at a 40-year high and the Fed committed to raising interest rates to help bring it back down, investors are concerned about a potential economic slowdown.
Whether or not a serious slowdown occurs, or to what degree, is still to be seen. But one thing investors should keep in mind is that investing in good companies -- even when the market is down -- and holding on to them for five years or more is still one of the best ways to experience significant share price gains.
