Rate Cuts, Upstart, and a Stock That Might Actually Be Worth Looking At

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Well, well, well. After what feels like a century of rate hikes that seemed to only serve as a reminder of how much less fun the world is when money gets expensive, investors finally got their precious rate cut. The Fed, bless its little heart, has slashed the funds rate by 25 basis points, bringing it to 4%-4.25%. Honestly, if I had a dollar for every time someone said “don’t worry, it’ll go down soon,” I could probably fund my own “Contrarian Investor” reality show.

But let’s pause for a moment and really think about this. Jerome Powell, bless him again, sauntered onto his podium to announce the rate cut. He said it was to support the job market-because apparently, a strong labor market is the secret sauce to the American economy. Spoiler alert: it’s probably not. But then again, what do I know? I’m just a humble investor, eyeing my portfolio like it’s a dog trying to decide if it’s going to nap or eat something it found under the couch.

But wait, there’s more (because, of course, there is). The Fed, in its infinite wisdom, has also made future projections that scream, “We’re softening this up a little more.” According to their “dot plot” (yes, it’s as fun as it sounds), two more rate cuts are on the horizon this year, plus another one next year. So, we’re looking at a nice long road to 3% Fed funds rate. Isn’t that just lovely? A little more room to breathe. Well, for some of us. For others… we can only hope.

So, how did the market react to all of this juicy information? Well, let’s just say it was like watching a dog chasing its tail. The S&P 500 initially popped, as expected, but then decided that joy was overrated and promptly dropped 1%. And then, just when I thought I could take a nap, it pulled a classic “I’m fine” move and recovered some of those losses. The end result? Pretty much a wash-down 0.1% for the day. Classic. It’s like we’re all just waiting for something big to happen, but nobody wants to make the first move.

Now, on to the pressing question: what does this all mean for stock prices? Are we heading for a market rally, or are we in for a slow, painful decline? My guess? We’re somewhere in between. The market’s likely already priced in the rate cuts, considering the Fed’s subtle hints in the past few weeks, coupled with the whole “we’re kinda seeing signs of a slowing labor market” thing.

However, and here’s the twist in the plot (the fun part), there is one stock that, for reasons I can’t entirely explain but definitely *like*, looks like a solid bet in this low-rate world.

Why Upstart Might Actually Be Worth It

Upstart (UPST), that little AI-powered loan origination company, has followed the same dance as the S&P 500-rising, falling, and then rising again. In fact, it ended the day up 1.4%. One could almost say it’s the poster child for why being patient and occasionally ignoring your instincts might just pay off. The company, like the rest of us, had a rough time when rates spiked in 2022. But, unlike the rest of us, it managed to get its act together. While the broader market was throwing tantrums, Upstart decided to go into full-on “rebuild mode” with a shiny new AI model, fresh loan-buying partners, and a broader product offering, including auto and home loans (massive, by the way, MASSIVE markets).

Upstart’s second-quarter results were impressive, to say the least. Revenue up 102% year over year, landing at a cool $257 million. And a GAAP profit of $5.6 million-up from a ghastly loss of $54.5 million just a year ago. If that isn’t a “how to bounce back like a pro” story, I don’t know what is.

Management, to its credit (get it?), has kept things realistic. They’re not anticipating the rate cuts will work miracles. But they are anticipating solid growth-and they’ve got the right moves in place to keep going. This is an important distinction, by the way. Not every company is so… grounded.

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What Rate Cuts Mean for Upstart (and Why You Should Care)

So, where does Upstart go from here? Is it going to hit 2021 levels of mind-blowing growth? Probably not anytime soon. But here’s the thing: it doesn’t need to. Upstart is playing in a multi-trillion-dollar market, and while it currently holds a tiny piece of that market, falling interest rates are about to make that pie even bigger. So, if you’re thinking, “Oh, it’s too late to hop on this train,” think again. At a market cap of less than $7 billion, there’s *plenty* of room for growth. And, with their AI model significantly better at predicting credit risk than, say, the venerable FICO score, they could very well become the household name of loans in the future.

In conclusion, I know. I know. It’s hard to think long-term when the market’s gyrating like a teenager at a school dance. But if you’re looking for a stock with staying power, Upstart might just be the unexpected gem you’ve been waiting for. 🤔

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2025-09-21 11:28