The stock market has held its own this week, but Friday morning seemed likely to bring a lower open to the trading session. The latest readings on employment showed the economy adding 372,000 jobs in June, which some believe might be a sign that a recession isn't imminent despite steep rises in interest rates. As of 8:45 a.m. ET, futures contracts on the Dow Jones Industrial Average (^DJI 0.54%) had fallen 51 points to 31,316. S&P 500 (^GSPC 1.02%) futures had given up 19 points to 3,886, and Nasdaq Composite (^IXIC 1.45%) futures had dropped 112 points to 12,026.
One of the most volatile stocks recently has been Upstart Holdings (UPST 4.98%), and the artificial-intelligence-informed credit scoring platform provider saw its shares fall sharply after warning about its coming earnings results. However, another stock that has been struggling for a long time got a much-wanted bounce on news that it's taking aggressive action to unlock value for shareholders. You'll learn more about both stocks below.
Upstart sees a tougher environment
Shares of Upstart Holdings fell 18% in premarket trading on Friday. That threatened to send the stock perilously close to its recent lows from two months ago.
Prompting the decline was Upstart's preliminary financial report for the second quarter. The company cut its revenue guidance sharply, slashing nearly 25% from its previous outlook and projecting just $228 million in sales for the period. Upstart will lose between $27 million and $31 million, down from earlier projections to break even or post losses of no more than $4 million for the period.
Co-founder/CEO Dave Girouard blamed the shortfall on a number of factors. First, inflation and recession concerns have led banking partners to cut back on their lending activity, which in turn makes it harder for Upstart to get its cut of origination revenue. At the same time, in response to investor concerns about carrying loans on its balance sheet, Upstart quickly got rid of those positions, incurring substantial losses in doing so.
Upstart gave every indication of putting itself into survival mode, with hiring limits and further measures meant to ensure positive cash flow even with lower loan volume. Given that Upstart had already led investors' expectations lower back in May, the latest bad news was especially disappointing.
Seritage makes moves toward liquidation
On the other hand, shares of Seritage Growth Properties (SRG 2.26%) surged more than 50% in premarket trading. The real estate investment trust finally responded to investor pressure and proposed a plan to sell its assets and dissolve itself, distributing remaining proceeds to shareholders.
Seritage filed its preliminary proxy materials with the U.S. Securities and Exchange Commission (SEC) late Thursday, and they included a proposed plan of sale for all of Seritage's assets. The company is looking to get blanket permission from shareholders to sell off assets as it sees fit, rather than having to get separate approval upon receiving offers. In particular, Seritage wants to hold open the possibility of looking at multiple transactions in an effort to find buyers who are most willing to pay up for particular subsets of the company's real estate portfolio.
Seritage will continue to go through strategic review as it looks for specific ways to move forward with its overall plan. Moreover, the company emphasized that it might not be successful with a sale.
Even with today's big gain in the stock, Seritage remains more than 75% below where it traded immediately before the pandemic in late 2019. Investors likely won't get a big payday from a sale, but at least they won't have to worry about continuing cash burn as they wait.
