Upstart shares plummet 55% after company cuts full-year revenue forecast

Read Time:2 Minute, 7 Second


In this photo illustration an Upstart Holdings logo is seen on a smartphone screen.

Pavlo Gonchar | SOPA Images | LightRocket | Getty Images

Shares of Upstart plummeted about 55% premarket Tuesday after the artificial intelligence lending platform cut its full-year revenue outlook, citing rising interest rates and an uncertain economy.

The company had reported better-than-expected first-quarter results Monday after the bell, but also slashed its 2022 revenue forecast to $1.25 billion from a prior estimate of $1.4 billion.

Upstart expects second-quarter revenue of $295 million to $305 million, while analysts surveyed by Refinitiv predicted $335 million, on average.

“Given the general macro uncertainties and the emerging prospect of a recession later this year, we have deemed it prudent to reflect a higher degree of conservatism in our forward expectations,” said CFO Sanjay Datta on Upstart’s earnings call Monday.

The company, which uses artificial intelligence to gauge creditworthiness, said climbing interest rates are hurting loan volume.

“In addition to increasing rates for approved borrowers, this also has the effect of lowering approval rates for applicants on the margin,” said CEO David Girouard on the earnings call.

Upstart management indicated further economic challenges ahead as the Federal Reserve continues to hike rates and cut its balance sheet to tamp down on persistent inflation.

“Given the hawkish signals from the Fed, we anticipate prices will move even higher later this year, which will have the effect of reducing our transaction volume, all else being equal,” Girouard added.

Plus, the company noted borrower defaults are normalizing. During the pandemic, charge-off and delinquency rates reached decades-long lows amid government aid and stimulus programs.

“After remaining at historically low levels for the past 18 months, loan default rates rose quite abruptly towards the end of last year, and are now back to or in some cases above pre-pandemic levels,” Datta said.

Upstart received a slew of downgrades from Wall Street analysts at Piper Sandler, Citigroup and Stephens after the quarterly report.

Piper Sandler analyst Arvind Ramnani on Tuesday downgraded the stock to a neutral rating from overweight and slashed its price target on the stock to $44 from $230. The new price projection implies 75% downside from Upstart’s closing price Monday.

“The range of outcomes for UPST has increased, given macro uncertainties,” Ramnani said in the note. “We expect there could be further downside based on the speed and intensity of a recession.”


If you want to know more about business please go to https://updatednews24.com/category/business/

Happy
Happy
0 %
Sad
Sad
0 %
Excited
Excited
0 %
Sleepy
Sleepy
0 %
Angry
Angry
0 %
Surprise
Surprise
0 %
We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. We also share information about your use of our site with our social media, advertising and analytics partners. View more
Cookies settings
Accept
Privacy & Cookie policy
Privacy & Cookies policy
Cookie name Active

Who we are

Suggested text: Our website address is: https://updatednews24.com.

Comments

Suggested text: When visitors leave comments on the site we collect the data shown in the comments form, and also the visitor’s IP address and browser user agent string to help spam detection. An anonymized string created from your email address (also called a hash) may be provided to the Gravatar service to see if you are using it. The Gravatar service privacy policy is available here: https://automattic.com/privacy/. After approval of your comment, your profile picture is visible to the public in the context of your comment.

Media

Suggested text: If you upload images to the website, you should avoid uploading images with embedded location data (EXIF GPS) included. Visitors to the website can download and extract any location data from images on the website.

Cookies

Suggested text: If you leave a comment on our site you may opt-in to saving your name, email address and website in cookies. These are for your convenience so that you do not have to fill in your details again when you leave another comment. These cookies will last for one year. If you visit our login page, we will set a temporary cookie to determine if your browser accepts cookies. This cookie contains no personal data and is discarded when you close your browser. When you log in, we will also set up several cookies to save your login information and your screen display choices. Login cookies last for two days, and screen options cookies last for a year. If you select "Remember Me", your login will persist for two weeks. If you log out of your account, the login cookies will be removed. If you edit or publish an article, an additional cookie will be saved in your browser. This cookie includes no personal data and simply indicates the post ID of the article you just edited. It expires after 1 day.

Embedded content from other websites

Suggested text: Articles on this site may include embedded content (e.g. videos, images, articles, etc.). Embedded content from other websites behaves in the exact same way as if the visitor has visited the other website. These websites may collect data about you, use cookies, embed additional third-party tracking, and monitor your interaction with that embedded content, including tracking your interaction with the embedded content if you have an account and are logged in to that website.

Who we share your data with

Suggested text: If you request a password reset, your IP address will be included in the reset email.

How long we retain your data

Suggested text: If you leave a comment, the comment and its metadata are retained indefinitely. This is so we can recognize and approve any follow-up comments automatically instead of holding them in a moderation queue. For users that register on our website (if any), we also store the personal information they provide in their user profile. All users can see, edit, or delete their personal information at any time (except they cannot change their username). Website administrators can also see and edit that information.

What rights you have over your data

Suggested text: If you have an account on this site, or have left comments, you can request to receive an exported file of the personal data we hold about you, including any data you have provided to us. You can also request that we erase any personal data we hold about you. This does not include any data we are obliged to keep for administrative, legal, or security purposes.

Where we send your data

Suggested text: Visitor comments may be checked through an automated spam detection service.
Save settings
Cookies settings