December 7, 2023

Upstart Holdings

stock was diving Wednesday after its guidance came in below expectations. That sent the stock of the artificial-intelligence lending company falling after a steep rally so far this year.


stock (ticker: UPST) is down 28% at $37.09 in Wednesday trading. The stock had almost quadrupled this year through Tuesday’s close after a positive earnings update squeezed short sellers earlier this year. 

Upstart said late Tuesday that for the third quarter it expects $140 million in revenue and $5 million in adjusted earnings before interest, taxes, depreciation, and amortization, missing expectations for revenue of $155 million and $9.6 million in adjusted Ebitda, according to FactSet.

Upstart management said on an earnings call that growth in the short term was likely to be constrained by banks being cautious about lending and therefore funding its loans.

Citi analysts wrote in a research note, “We remain bearish on [Upstart] stock near-term, believing that higher interest rates…cumulative inflation, and the (gradual) return of student loan payments portend that non-prime lending fundamentals could get worse from here.”

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Citi kept a Sell rating on Upstart stock with a $15 target price.

For the second quarter, Upstart booked a net loss of 34 cents a share, compared with a loss of 36 cents in the same period a year earlier. On an adjusted basis, Upstart earned 6 cents a share, whereas analysts tracked by FactSet had expected a loss of 7 cents.

Second-quarter revenue fell to $136 million from $228.2 million, broadly in line with analysts’ expectations. 

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BTIG analyst Lance Jessurun wrote in a research note, “While the name will likely trade down given…lofty investor expectations, we remain more bullish than the Street. We continue to see strong adoption among bank / credit union partners, improving loan performance and expected cash flows relative to targeted levels,”

Jessurun lowered his target price on Upstart stock to $64 from $72, and kept a Buy rating.

Write to Adam Clark at [email protected]

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