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Upstart shares just tanked 25%: find out why

on Nov 8, 2022
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  • Upstart reports disappointing results for its fiscal third quarter.
  • The fintech company also issued weak guidance for the future.
  • Upstart shares are now down about 90% versus the start of 2022.

Upstart Holdings Inc (NASDAQ: UPST) tanked more than 25% in extended trading on Tuesday after the AI lending platform reported a disappointing third quarter and issued weak guidance for the future.

Upstart Holdings Q3 financial highlights

  • Lost $56.2 million that translates to 69 cents per share
  • That compares to $27.8 million of net income last year
  • Adjusted loss on a per-share basis printed at 24 cents
  • Revenue slipped 31% year-on-year to $$157 million
  • Consensus was 8 cents loss on $169 million revenue

Other notable figures in the earnings report

Upstart shares are now trading at tenth of a price at which they started the year as the Nasdaq-listed firm continues to wrestle with loan funding. Aggressive rate hikes have also weighed on this financial technology stock.

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Transaction volume and conversion rate were down 48% and 23%, respectively, versus a year ago. In the earnings press release, CEO Dave Girouard said:

We’re eyes wide open to the challenges of the current macroeconomy and determined to make the decisions that will optimize for the long-term success of Upstart.

Upstart shares tumble on weak guidance

For the current financial quarter, Upstart forecasts its revenue to fall between $125 million and $145 million. In comparison, analysts had called for $185.3 million. Still, the Chief Executive added:

With a healthy balance sheet, robust unit economics and strong pricing power, we believe that we’re well positioned to navigate an extended period of economic uncertainty while continuing to invest strategically in future growth.

Upstart spent about $25 million on share repurchase in Q3. Investors interested in trading this stock on the sell-off should know that the Wall Street currently rates Upstart shares at “underweight”.