Options Traders, Analysts Swarm Plummeting AI Stock

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Upstart Holdings Inc (NASDAQ:UPST) is down 56.2% to trade at $33.82 at last check, after the company issued a disappointing current-quarter revenue forecast, which cast a shadow on better-than-expected first-quarter results. In turn, the security attracted two downgrades — one from Piper Sandler to “neutral” from “overweight,” and one from Stephens to “underweight” from “equal weight” — as well as four price-target cuts.

Options traders are targeting the equity as well, with 133,000 calls and 113,000 puts across the tape so far, which is five times the average intraday amount. Most popular are the 5/13 30-strike put and 40-strike calls, with new positions currently being opened at both.

Upstart stock earlier hit a 17-month low — its lowest level since first going public in December 2020. Today’s bear gap also has the equity trading well below multiple key trendlines, including the 40-day moving average. Now pacing for its fourth-straight daily drop, UPST has shed 89% in the last six months.

UPST 40 Day

Short sellers are piling on the equity, too. Short interest is up 53.7% over the last two reporting periods, and the 19.08 million shares sold short now make up a whopping 26.1% of UPST’s available float.

What’s more, the options pits have been more bearish than usual. This is per Upstart stock’s Schaeffer’s put/call open interest ratio (SOIR) of 1.23, which ranks higher than 80% of readings from the last 12 months.

Now may be the right opportunity to bet on the stock’s next move with options. given UPST’s Schaeffer’s Volatility Scorecard (SVS) stands at 95 out of 100. In simpler terms, the equity has exceeded option traders’ volatility expectations in the last year.