These 2 Fintech stocks are back in the money

The stock market has been resilient in 2023, and has proven its ability to bounce back from adversity in 2022. Even when stocks have started days with losses, as they did on Wednesday, they have often found a way to recover at the end of the trading session .

The Nasdaq Composite (^IXIC 0.92%) was the best performer among major market indexes, rising nearly 1% but even wider S&P 500 (^GSPC 0.28%) and Dow Jones Industrial Average (^DJI 0.11%) climbed back to post gains.

Data source: Yahoo! Finance.

Among various industries, fintech stocks have been under pressure for more than a year, as adverse trends have hit this high-growth sector hard. But on Wednesday, shares of both credit scoring pioneer Upstart Holdings (UPDATE 28.13%) and cryptocurrency exchange giant Coinbase Global (COIN 17.47%) moved sharply higher and regained lost ground. Here’s what happened to Upstart and Coinbase to justify higher stock prices.

Upstart starts up again

Shares in Upstart rose 28% on Wednesday. The artificial intelligence-powered credit scoring and lending marketplace provider reported fourth-quarter financial results late Tuesday that reassured some investors about the company’s outlook.

To be clear, Upstart’s fourth-quarter numbers were pretty ugly. Revenue of $147 million was down more than half year-over-year, reflecting the poor lending environment, particularly on the personal loan side of the business. Transaction volumes fell 62% from year-ago levels to around 154,500 loans, and conversion rates fell from 24% 12 months ago to just 11% in the latest quarter. Upstart posted an adjusted loss of $0.25 per share, reversing a year-earlier result.

In addition, Upstart expects continued pressure on the economy. It projected revenue for the first quarter to come in at around $100 million, with an adjusted net loss of $70 million.

Still, CEO Dave Girouard believes Upstart’s advanced technology, improved modeling to take advantage of artificial intelligence and a more diverse data set that now includes some periods of economic downturn have put it in a better position for 2023 and beyond. Shareholders seem to agree, and the stock is now up 75% from its lows, although it remains well below the highs of the past couple of years.

Coinbase is riding the crypto wave

Meanwhile, shares of Coinbase Global ended up 17% for the day. The cryptocurrency exchange won’t release its financial results until next week, but it received some good news from the crypto markets and noted that it is in a good position to handle the latest developments in the industry.

Coinbase tends to do well when cryptocurrency markets are performing well, and a big increase in the price of key digital assets of between 5% and 10% helped the exchange provider’s outlook. Strong crypto markets tend to stimulate more activity from exchange clients, and Coinbase’s revenue is directly linked to levels of trading activity.

In addition, Coinbase revealed that it believes it is already in compliance with a recent proposal by the US Securities and Exchange Commission (SEC) to introduce new rules for qualified custodians of digital assets.

In general, the SEC wants to ensure that custodians hold assets in a way that insulates clients from losses if the entity files for bankruptcy protection or becomes insolvent.

Crypto investors still deal with other threats, such as possible regulations that would limit crypto betting practices. Still, Coinbase shareholders see the long crypto winter potentially thawing, and that’s good news for the industry as a whole.