Shares of Upstart (NASDAQ:UPST) have been on fire as bulls continue to drive shares higher. While UPST stock is up just 3% in midday trading on Tuesday, the stock was up as much as 5.7% at session highs. Garnering more attention than today’s move? The longer-term rally.
UPST stock rallied over 13% on Monday and is trying to rally for a fourth straight week. It’s doing a pretty good job, up almost 16% for this week so far. However, there’s more to the story here.
Upstart shares have climbed in nine of the last 10 weeks. Assuming it can finish higher this week, that will notch a rally in 10 of the last 11 weeks. In that span, the stock has rallied almost 370% and is currently up 350% from the May low.
AI has been a big catalyst for the rally — or at the very least, Upstart’s association with artificial intelligence (AI). The company says that “traditional lending is broken.” Further, the firm notes that:
“Upstart pioneered the application of artificial intelligence to lending, enabling a system that is dramatically more efficient and more accurate for both borrowers and lenders. Rapid developments in AI foreshadow a world where the right borrower is automatically approved at the right price, instantly and effortlessly.”
With that in mind, there’s absolutely no question that Upstart is getting lumped in with the AI trade. Full of momentum, Nvidia (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO), C3.ai (NYSE:AI) and others continue to push higher.
Can Upstart keep pace?
Short Interest Is High for UPST Stock
Not only can Upstart stock keep pace, but it could continue to lead the rally. Shares have been booming higher over the last few months as UPST stock works on its third straight monthly gain.
Now sporting a market capitalization of almost $4.5 billion, Upstart is among one of the smaller AI names that many investors are familiar with.
Along with its bullish momentum and small market cap, the stock also has a high short interest. Currently, almost 40% of the stock is sold short, which could act as a huge upside catalyst should UPST gain even more momentum.
When Upstart last reported earnings in early May, the stock posted a one-day gain of almost 35%. In February, it was a one-day 28% rally. While the stock initially had a negative earnings reaction in November, shares quickly put together a three-day 65% rally.
With earnings scheduled for after close on Aug. 8, bulls surely have that date circled on their calendar.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
