Upstart Holdings (UPST -2.69%) stock was on the move today, rising 9.9% as of 1:09 p.m. ET.
There was no company-specific news out on the fintech stock, but traders are positioning themselves ahead of its earnings report after hours. Based on current options pricing, traders expect Upstart to swing 24% after hours, a typical move for the volatile lending technology disruptor.
Upstart, which connects borrowers to lenders using artificial intelligence technology to assess creditworthiness and price loans, has plunged in the market sell-off, down more than 90% from its peak.
Investors have turned skeptical of the one-time market darling amid rising interest rates and fears of a recession, which has led banks to beef up their loan loss reserves, as Upstart has yet to prove itself and its model through a full credit cycle.
Given the dynamic market environment and the larger questions about the economy, it's not surprising that investors expect a big swing in the stock as the company's performance during the second quarter will offer some key insights into its long-term prospects.
The stock may also be getting a boost in the aftermath of Friday's strong jobs report, which shows the economy remains strong in spite of the recession talk. Positive economic data, including a falling inflation rate, would certainly be bullish for Upstart and help alleviate fears of a wave of defaults. Shifting market sentiment also seems to be driving a number of growth stocks higher, including Upstart.
For the second quarter, analysts are calling for revenue of $241.6 million, up 24% from the quarter a year ago, and see earnings per share of $0.10, down from $0.62.
With those relatively modest estimates and a price-to-earnings ratio of just 19, Upstart stock should soar if it can beat the Wall Street view. Its P/E ratio is in line with the S&P 500, suggesting that the market believes its high-growth days are about to cool off.