The $750 Million Question
Today we're focusing on a single, fascinating moment in the market. We're looking at Upstart (ticker: UPST), the AI lending platform, and specifically that really intense trading activity right before their Q2 earnings report around August 5th.
This deep dive shows a spectacular contradiction: massive growth potential on one side and some pretty serious caution from institutions on the other. Our mission is to lay out both the opportunity and the risks in what's clearly a very volatile stock.
đź’° July 30th: The Day Money Moved
Upstart stock jumped 3.60%, closing at $83.33. But the price move wasn't even the main story—it was the sheer amount of money changing hands: $750 million in trading volume in one day, representing an 84.18% increase from the day before.
The Dual Personality: Stunning Projections
If you just read the headlines, you'd think this stock was about to take off—a moonshot. The headline growth figures were truly stunning, especially considering the rollercoaster Upstart had been on for the previous year.
Q2 Year-Over-Year Projections:
• Earnings per share (EPS) growth: 258.8%
• Revenue growth: 76.5%
That's not just a rebound—that's an operational explosion. For any company hitting numbers like that, it suggests they're not just recovering, they're seriously accelerating. That kind of raw growth paints a picture of a company whose AI lending model might finally be hitting critical mass.
The Hidden Warning: Zacks ESP
Despite those fantastic headline forecasts, the smart money was getting nervous. Some were already scaling back expectations. The Zacks earnings ESP (Expected Surprise Prediction) saw a bearish revision, landing at negative 6.72%.
⚠️ The ESP Contradiction
That huge 258% growth number likely reflects a bounce back from a really low base the year before. But the Zacks ESP measures something different: how much the most accurate and most recent analyst estimates differ from the wider consensus.
A negative ESP of -6.72% means analysts who historically have the best track record are predicting results 6.72% below what the general consensus was hoping for.
The public story is amazing rebound, but behind the scenes, the analysts who are usually right are quietly saying: "Maybe temper expectations—they're likely going to disappoint."
Institutional Retreat
That quiet analytical caution translated into actual selling from those managing billions. Investment Asset Management, a significant institutional holder, reduced their stake by a notable 16.1%.
That kind of trimming isn't accidental—it feels like a strategic move to reduce risk before expected volatility like earnings.
The CEO's $3.1 Million Signal
What really got people talking was the insider activity—the CEO himself. CEO Dave Girouard offloaded a huge chunk of his holdings: 44.19% of his total shares, worth over $3.1 million.
Almost half his stake. Right before a quarter where analysts were predicting that massive 258% growth.
🚨 Timing Is Everything
CEOs sell shares all the time—maybe for cash needs or smart diversification. But selling that much (nearly half his total stake) right before a critical earnings report expected to be highly volatile and potentially very positive?
If he genuinely believed those 258% growth numbers were solid and would send the stock soaring after earnings, why sell $3.1 million worth right now? He'd be leaving potentially massive gains on the table.
Management's actions often speak louder than any confident interview they give. It forces you to ask: If the guy running the show is cashing out almost half his chips weeks before the big reveal, should you be betting the farm?
The Contrarian Bull: Eric Jackson's 15x Thesis
Someone was definitely betting big on Upstart. We're talking about Eric Jackson over at EMJ Capital, who was actively building a significant long position in UPST, totally unfazed by the insider selling.
His outlook wasn't just for the next quarter—it was a massive multi-year forecast that grabbed the attention of momentum traders.
🎯 The 15x Projection
Eric Jackson projected a stunning 15-fold return (15x gain) by the year 2028. That level of belief was injecting hundreds of millions of dollars into the stock, driving that huge volume we saw.
The AI Advantage Thesis
Jackson's core thesis centers on Upstart's AI-driven lending platform being structurally superior to traditional methods. The model analyzes over 1,600 different variables—things like educational history, employment trends, specific banking behaviors that FICO doesn't really touch.
The idea: This lets them approve more borrowers at lower rates of loss compared to traditional lenders. They can find good borrowers that the old systems miss.
The Bullish Argument: The AI isn't just fancy tech talk—it's a real structural advantage. Once the broader economy stabilizes, that superior risk assessment engine will generate exponentially higher profits.
The Macro Tailwinds
Jackson also factored in potential help from the Federal Reserve—future rate cuts. Lower rates generally help lenders, making lending more profitable and expanding the pool of available capital. It could turbocharge Upstart's loan volume potential when rates come down.
Two Technical Factors for Momentum Traders:
1. Improving Loan Approval Rates: Every time the AI demonstrates it's more effective, it unlocks more transaction volume and validates that core advantage.
2. Small Share Float: Only about 94 million shares available for trading. When huge trading volume (like that $750 million) pours into a stock with a small float, it has a much bigger, disproportionate impact on the price. This can cause really rapid price swings both up and down, making it prone to short squeezes and high-speed momentum trading.
The Technical Picture
In the immediate short term leading right up to those earnings, the momentum crowd backing Jackson's view was clearly winning the tug of war. The stock was trading within a rising trend line, and crucially, that heavy volume on July 30th was supporting the upward price move, confirming short-term strength technically speaking.
The Power of Volume: A 166% Strategy
Here's a fascinating piece of data about how high-volume trading strategies actually perform in the real world. One specific simple strategy: buying the top 500 stocks based purely on their daily trading volume and holding them for just one day.
đź“Š High-Volume Performance
This strategy generated an astounding 166.71% return since 2022. Just from chasing high volume daily. For comparison, the S&P 500 returned significantly less over the same period.
High volume is often the market's early warning system. It signals something is happening: forced buying, sudden news, significant structural shifts that short-term traders can potentially jump on. Seeing Upstart suddenly spike 84% in volume on July 30th puts it right into that category of stocks that historically signal rapid momentum is underway.
For a certain type of trader, the sheer force of capital moving right now is a more reliable signal than maybe multi-year forecasts or even what insiders are doing. When that much money moves that fast, something is usually up that warrants immediate attention.
The Perfect Storm of Conflict
We've looked at two really extreme poles:
On One Side: Massive operational potential—258% projected EPS growth, driven by what bulls see as a fundamentally better AI model. Eric Jackson thinks this could lead to a 15x return eventually.
Crashing Against That: Calculated caution—the negative Zacks revision hinting at a potential miss, big institutions trimming their stakes, and most dramatically, the CEO liquidating almost half (44.19%) of his personal holdings right before the results.
🤔 The Ultimate Question
When faced with signals this conflicting, where one side offers huge multi-year game-changing potential, and the other side offers immediate concrete actions (CEO liquidation, institutions pulling back)—how do you decide which signal carries more weight?
Do you put more faith in the conviction of one well-researched bull like Eric Jackson betting on that long-term AI story and those 15x gains? Or do you weigh more heavily the immediate actions of the big funds, and especially the CEO cashing out nearly half his personal stake right before the news drops?
The Bottom Line
This is where fundamental tech-driven optimism clashes violently with immediate insider reality checks. That single day—that $750 million in volume—was the market placing its bets in real time.
The ultimate test for any investor is: you're faced with signals this conflicting, where one side offers huge potential and the other offers concrete warning actions. Which signal holds more truth about the road ahead for Upstart?
You have to decide which piece of this very contradictory puzzle you trust the most, based on your own investment thesis and tolerance for risk.