Upstart(US:UPST) The Motley Fool·2025-09-21 08:12Core Viewpoint - The Federal Reserve has cut the Fed funds rate by 25 basis points to 4% to 4.25%, marking its first rate cut of the year, aimed at supporting the job market amid growing downside risks in the labor market [2][3] Summary by Sections Federal Reserve Actions - The FOMC's decision to cut rates was widely anticipated, and the committee now expects two more rate cuts this year, with a long-term target of 3% for the Fed funds rate [3] Market Reaction - Following the announcement, the S&P 500 index initially rose but then lost approximately 1% during Chair Powell's press conference, ultimately finishing nearly flat, down 0.1% for the session [5] Company Focus: Upstart - Upstart, an AI-based consumer loan originator, experienced a 1.4% increase in stock price, benefiting from lower interest rates as demand for loans rises and approval rates improve [7] - In 2021, Upstart saw significant growth and profitability when rates were near zero, but faced challenges in 2022 as rates increased. The company has since improved its AI model and expanded into auto and home loans, achieving triple-digit percentage growth in these areas [8][9] - Upstart's Q2 results showed a 102% year-over-year revenue increase to $257 million, with a GAAP profit of $5.6 million, a significant turnaround from a loss of $54.5 million in the same quarter last year [9] Future Outlook for Upstart - While Upstart's business may not return to 2021 levels soon, it operates in a multi-trillion-dollar addressable market and is well-positioned to benefit from falling interest rates, which will expand its market potential [11][12] - With a market cap of less than $7 billion, Upstart has substantial upside potential as it continues to enhance its credit risk assessment model [13]