What Happened?
A number of stocks fell in the morning session after the April PPI report sent Treasury yields to 10-month highs, with the 10-year yield rising to 4.49%.
This 'sticky and accelerating' inflation data effectively eliminated 2026 rate-cut hopes, raising the discount rate applied to long-duration growth earnings. BNN Bloomberg noted technology-related inflation was emerging as a structural concern, with computer software prices up year-over-year, potentially triggering a pullback in enterprise software spending.
Software companies sell long-duration subscription revenue, recurring contracts whose value is heavily weighted toward future earnings. When Treasury yields rise, the discount rate investors apply to those future cash flows rises with them, which mechanically reduces the present value of the business and compresses the price-to-earnings multiple. Beyond the rate channel, the PPI print confirmed that software-specific inflation was running well above the headline rate. This 'sticky' pricing power for vendors is a double-edged sword: while it supports current revenue, it risks forcing enterprise customers to consolidate seats or delay new deployments to protect their own margins in a negative real-wage environment.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Design Software company Autodesk (NASDAQ: ADSK) fell 3.9%. Is now the time to buy Autodesk? Access our full analysis report here, it’s free.
- E-commerce Software company Commerce (NASDAQ: CMRC) fell 3.4%. Is now the time to buy Commerce? Access our full analysis report here, it’s free.
- Banking Software company Q2 Holdings (NYSE: QTWO) fell 3.6%. Is now the time to buy Q2 Holdings? Access our full analysis report here, it’s free.
- Lending Software company Upstart (NASDAQ: UPST) fell 3.9%. Is now the time to buy Upstart? Access our full analysis report here, it’s free.
- Project Management Software company monday.com (NASDAQ: MNDY) fell 3.8%. Is now the time to buy monday.com? Access our full analysis report here, it’s free.
Zooming In On Upstart (UPST)
Upstart’s shares are extremely volatile and have had 61 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 9.6% on the news that the company reported mixed first-quarter 2026 financial results, where revenue surpassed expectations but profitability fell significantly short of analyst forecasts.
While Upstart's revenue grew 44.4% year on year to $308.2 million, beating the consensus estimate of $303.1 million, this was overshadowed by disappointing profit figures. The company posted a GAAP loss of $0.07 per share, a stark contrast to Wall Street's expectation of a $0.12 per share profit. Additionally, the company's full-year revenue guidance of $1.4 billion, while reconfirmed, came in just below analysts' expectations. This outlook likely signaled caution to investors about the year ahead, contributing to the stock's decline.
Upstart is down 41.8% since the beginning of the year, and at $26.68 per share, it is trading 68.3% below its 52-week high of $84.13 from July 2025. Investors who bought $1,000 worth of Upstart’s shares 5 years ago would now be looking at only $317.51.
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