To The Moon

The share price of upstart Holdings, an artificial intelligence-driven lending platform, plunged nearly 60% after the company lowered its annual revenue forecast and predicted that loan demand would decline with the rise of U.S. interest rates on last Tuesday.

Is the business broken? Does that kill the long-term bullish thesis?

Let's take a look at the financial report data first

Revenue went from $121M to $310M in Q1. This was larger than the expected $300M. Net income also nearly tripled from 2021, which is impressive.

What's more, They also increased bank partners from 42 at the end of 2021 to 57 at the end of Q1, and increased car dealerships from 410 at year end to 525 at the of Q1.

For Q2, the company predicted $295M to $305M in revenue and $1.25B for the full year 2022. Consensus was $335M for Q2 and $1.4B for the full year. While lowered guidance is a tough thing to see for long investors,

Much of the reason for Upstart's big decline over the past week was negative reaction from shareholders about its latest financial results. In particular, investors were troubled that Upstart seemed to be keeping loans on its balance sheet rather than selling them off to investors, as the company had done in the past.

The company held its annual shareholder meeting and made a presentation at a fintech industry conference that sought to offer an explanation for some of the factors hurting the stock recently.

Upstart CFO Sanjay Datta helped to dispel some of those concerns in a presentation. He answered the investors' questions about the company's buyback, the reduction of senior executives' holdings and the fundamentals of the company's business, and stressed that the company, as a light asset, has profits, cash and good unit economic benefits.

• According to the shareholders' meeting, the CEO said that the company expected to buy back $4 billion of $Upstart Holdings, Inc.(UPST)$. The buyback has begun because the stock price is very attractive, but the CEO did not specify the specific buyback schedule and quantity respectively.
• Some investors asked about the reduction of senior executives' holdings. The CEO replied that in the past 10 years from the establishment of the company to the capital Road, it is understandable for senior executives to sell shares and obtain returns. In addition, they have disclosed the plan to sell shares on a monthly basis in advance, which is not a selling at highprice, and as CEO, he still invest a lot in the company.
• With regard to the company's risk loan business, the CEO said that the proportion of this part is very low and is being cleared.

The CEO's speech did enhance the confidence of many investors,On Wenesday trading, UPST rebounded 23.47%, so far this week, UPST rebounded by 22.37%.

Meanwhile the CEO said that upst would pay attention to interest rate risk, Upstart is a business that could suffer with rising interest rates and an economic slowdown.

The biggest things I will be paying attention to with Upstart is the balance sheet and interest rates and the potential chain reaction there. If interest rate hikes lead to a recession, that would certainly have an impact on broader economic activity and Upstart's new volume for cars and other loans.