Trading Strategies For Upstart Holdings Stock Before And After Q4 Earnings

Upstart Holdings, Inc UPST was rallying Tuesday as the company heads into its fourth-quarter earnings print after the close.

When Upstart printed its first-quarter earnings on Nov. 8, the stock gapped down 20% the following day and closed that session 10.4% lower.

For the third quarter, Upstart reported revenue of $157.23 million, which missed the $169.42-million consensus estimate. The company reported a loss of 24 cents per share, missing a consensus estimate of an 8-cent loss.

For the fourth quarter, analysts, on average, estimate Upstart will report an earnings loss of 47 cents per share on revenues of $133.59 million.

On Feb. 8, Morgan Stanley analyst James Faucette maintained an Underweight rating on Upstart and lowered the price target from $11.50 to $11.

The price target change came on the day that Affirm Holdings Inc AFRM, a competitor to Upstart, reported worse-than-expected second-quarter earnings and issued third-quarter and FY23 guidance below analyst estimates. In reaction to the earnings miss, Affirm plunged 17% the following day and Upstart, in sympathy, dropped 13%.

From a technical analysis perspective, Upstart’s stock looks bearish heading into the event, having settled into a possible downtrend pattern on the daily chart. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

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The Upstart Chart: Although Upstart negated its uptrend on Feb. 9, the stock hasn’t confirmed a new downtrend by printing a lower high. If the stock suffers a bearish reaction to its earnings print and falls lower on Wednesday, Tuesday’s high-of-day will serve as the lower high and a downtrend will be confirmed.

• If Upstart enjoys a bullish reaction to the news, traders and investors will want to see the stock regain the eight-day and 21-day exponential moving averages (EMAs) on Wednesday.
• If that occurs, the eight-day EMA will remain trending above the 21-day, which will give bullish traders more confidence going forward.
• If Upstart closes the trading session near its high-of-day price, the stock will print a bullish Marubozu candlestick, which could indicate higher prices are in the cards for Wednesday. Longer-term bullish traders would like to see the stock trend higher toward the 200-day simple moving average.
• Upstart has resistance above at $17.77 and $26 and support below at $12.01 and the psychologically important $10 mark.

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