Upstart Plunges 16.24%—What’s Fueling This Sudden Sell-Off?

Summary
• Upstart (UPST) reports Q2 2025 revenue of $257M, up 102% YoY
• Intraday price drops 16.24% to $69.2, breaching 52W low of $31.4
• Earnings beat estimates but stock trades down 10.9% post-announcement

Upstart’s Q2 2025 results showcased triple-digit revenue growth and GAAP profitability, yet the stock plunged 16.24% intraday, hitting a 52-week low. The sharp selloff defies the company’s bullish guidance and raises questions about market sentiment. With a dynamic PE ratio of 1,053 and a 12.9% turnover rate, the stock’s volatility underscores a disconnect between fundamentals and investor perception.

Positive Earnings Can’t Stem Sharp Sell-Off
Despite Upstart’s Q2 2025 results—$257M revenue (102% YoY), $5.6M GAAP net income, and $53.1M Adjusted EBITDA—the stock collapsed 16.24% intraday. The selloff followed a post-earnings decline of 10.9%, suggesting investors were unimpressed by the guidance. The company’s 52W high of $96.42 and current price of $69.2 indicate a 28% drawdown from peak. High dynamic PE (1,053) and a 12.9% turnover rate highlight speculative positioning, while the lack of sector alignment (Diversified Financials) points to stock-specific concerns.

Diversified Financials Mixed as JPM Holds Steady
The Diversified Financials sector showed mixed performance, with JPMorgan Chase (JPM) up 0.05% intraday. Upstart’s 16.24% drop diverged sharply from sector trends, reflecting its unique exposure to AI-driven lending risks. While JPM’s stable net interest income (up 0.8% YTD) contrasts with Upstart’s volatile revenue model, the latter’s focus on AI and fintech innovation remains a double-edged sword.

Options Playbook: Capitalizing on Volatility and Leverage
• 200D MA: $61.20 (below current price)
• RSI: 60.60 (neutral)
• MACD: 4.27 (bullish divergence)
• Bollinger Bands: $73.55–$85.91 (current price near lower band)

Upstart’s technicals suggest a short-term bearish bias amid long-term consolidation. Key levels to watch: 73.55 (lower Bollinger Band) and 65.00 (psychological support). The 30D MA at $73.72 and 200D MA at $46.67 highlight a wide range, indicating no clear trend. For leveraged exposure, consider options with high gamma and theta to capitalize on volatility.

Top Option 1: UPST20250815P67
• Contract Code: UPST20250815P67
• Type: Put
• Strike Price: $67
• Expiration: 2025-08-15
• IV: 80.82% (high volatility)
• LVR: 27.79% (moderate leverage)
• Delta: -0.3642 (moderate sensitivity)
• Theta: -0.0572 (moderate time decay)
• Gamma: 0.0404 (high sensitivity to price moves)
• Turnover: 618,440 (high liquidity)
• Payoff (5% downside): $1.26 (max(0, 67 - 65.74))
This put option offers a balance of leverage and liquidity, ideal for a bearish 5% move. High gamma ensures responsiveness to price swings, while moderate theta limits decay risk.

Top Option 2: UPST20250815C70
• Contract Code: UPST20250815C70
• Type: Call
• Strike Price: $70
• Expiration: 2025-08-15
• IV: 83.40% (high volatility)
• LVR: 19.19% (moderate leverage)
• Delta: 0.5093 (moderate sensitivity)
• Theta: -0.3253 (high time decay)
• Gamma: 0.0416 (high sensitivity to price moves)
• Turnover: 104,570 (high liquidity)
• Payoff (5% downside): $0 (max(0, 65.74 - 70))
This call option suits aggressive bulls expecting a rebound above $70. High gamma and moderate delta position it to benefit from a reversal, though theta decay is a risk.

Trading Hook: Aggressive bears may consider UPST20250815P67 into a breakdown below $65.00.

Backtest Upstart Stock Performance
The stock UPST has experienced a 16% intraday plunge, and we've backtested its performance following this event. Over the 3 days following the plunge, the win rate was 51.46%, with an average return of 1.38%. Over 10 days, the win rate was 50.77%, with an average return of 3.34%. Over 30 days, the win rate was 53.87%, with an average return of 9.21%. The maximum return during the backtest was 18.51%, which occurred on day 59 after the plunge.

Bullish Breakout or Bearish Breakdown? Watch These Levels
Upstart’s 16.24% intraday drop signals a critical juncture. While the stock’s fundamentals remain robust, the technicals and options activity suggest a bearish bias in the short term. Investors should monitor the 73.55 (lower Bollinger Band) and 65.00 (key support) levels. JPMorgan Chase (JPM)’s 0.05% gain highlights sector resilience, but Upstart’s AI-driven model remains a wildcard. For now, the path of least resistance appears downward—watch for a breakdown below $65.00 to confirm bearish momentum.