To The Moon

AI lending company has seen its stock decline almost 90% so far this year

Upstart Chief Executive Dave Girouard said his company is “eyes wide open to the challenges of the current macroeconomy.”

Upstart Holdings Inc. has seen its value plummet this year, and it appears set for further declines after posting lower-than-expected results for its latest quarter.

On Tuesday, the company, which uses artificial intelligence to inform lending decisions, said it took a third-quarter net loss of $56.2 million, or 69 cents a share. It generated net income of $27.8 million, or 30 cents a share, in the year-prior quarter.

After adjusting for stock-based compensation and certain other expenses, Upstart lost 24 cents a share, whereas it earned 60 cents a share a year before. Analysts tracked by FactSet were projecting an 8-cent adjusted loss per share.

Upstart’s revenue fell to $157 million from $229 million, while analysts had been anticipating $169 million.

Shares of Upstart were down 24% in after-hours trading Tuesday after a trading halt was lifted.

Executives at Upstart model $125 million to $145 million in revenue for the fourth quarter, while the FactSet consensus was for $185.3 million.

Upstart shares have struggled this year, falling nearly 90% over the course of 2022 as executives have discussed challenges in obtaining loan funding from bank partners. The company increasingly started to do more lending off its balance sheet in what it deemed a more transitional move, since executives don’t intend for the company to become a full-fledged bank.

“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,” Chief Executive Dave Girouard said in the latest release. “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.”

The company bought back 931,000 shares at about $25 million in total during the quarter.