What happened

Shares of Upstart Holdings (UPST 8.89%) surged by as much as 19.6% Wednesday. As of 2:23 p.m. ET, the stock was still up 15.5%.

The major market indexes were in rally mode, with a wide swath of stocks trading higher. While this trend no doubt contributed to the cloud-based AI lending platform's rise, blockbuster second-quarter results from another fintech stock likely provided additional tailwinds.

So what

While a check of all the usual sources turned up no company-specific news that could be driving Upstart higher, the stock was likely moving in sympathy with SoFi Technologies (SOFI 4.40%), which reported better-than-expected financial results. In Q2, SoFi generated record net revenue of $362.5 million, up 57% year over year, and its adjusted EBITDA soared 81%. This resulted in a loss per share of $0.12. 

To give those results context, analysts' consensus estimates were calling for revenue of $340.8 million and a loss per share of $0.14, so SoFi comfortably exceeded Wall Street's expectations on both counts. Perhaps more telling were SoFi's customer metrics: Its total members grew 69% year over year to 4.3 million, while total products used grew 79% to 6.6 million. 

In light of those results, management raised its full-year outlook, forecasting that adjusted net revenue would rise by roughly 50% to $1.51 billion at the midpoint of its guidance range.

Now what

So what does all this have to do with Upstart? Like many high-growth stocks with previously lofty valuations, Upstart has been hit hard in the bear market. Its stock is down by a whopping 92% from the peak it reached late last year, making it subject to big bounces.

To add insult to injury, Upstart stock got crushed when the company reported its first-quarter results in May. While its performance was admirable, management's guidance for slowing growth sent the share price into a tailspin. It shed 56% of its value in a single day. With the benefit of hindsight, investors likely now view that as an overreaction, particularly in view of the strength of SoFi's results. 

Finally, 35% of Upstart's shares were sold short as of July 15. SoFi's results and the upward momentum they contributed to Upstart may have helped ignite a short squeeze in the stock as investors moved to cover their short positions.