Upstart stock crashes after the lender cut its full-year outlook
Yahoo Finance Live's Brian Sozzi discusses Upstart stock.
Video Transcript
- Welcome back to Yahoo Finance Live. We're seeing some green on the screen in the pre-market, despite, really, a host of lackluster earnings this morning that are really hitting stocks like a Peloton. But again, you're seeing some buyers out there potentially looking for some form of short term bottom in the markets, lots of green on that screen here in the pre-market.
Now, let's turn our attention to some market movers this morning. Let's start with a downturn at upstart. I was looking for a better pun. Can't find it right now. The fintech lender is slashing its full year forecast to $1.25 billion in revenue compared to its prior forecast of $1.4 billion. And guys, this was a brutal quarter. Look at this market reaction. When I saw these results hit the tape last night, stock was down about 43%.
You're seeing the sell off just continue in a big way here in the pre-market, and it's justified. This is an AI company that focuses on lending and what they saw on the conference call right now, which is that the increase in interest rates is reducing business opportunities for their company. Immediately, I'm concerned about a coming quarter from a lemonade. They're also playing this AI insurance lending market. But again, upstart here. Not a good quarter, not a good outlook, not a good earnings call.
- I mean, at the end of the day, looking at Upstart and across the AI landscape right now, I think for what Upstart has tried to do at least early on in its life as a publicly traded company. And we've seen a lot of the IPOs of 2021 lose a ton of fanfare, but the expectations that we're seeing for growth from these companies I think far superseded what the actual reality for them, once they got into the markets, once they were trying to amass all of these subscribers or different financial partners and banks and the business to business uptick that they were expecting and pitching-- I mean, that's now just coming crashing down.
The reality is setting in, and now, for these companies who are now seeing investors and analysts have to continue to look at what their relationships are like with the banks and the credit unions who themselves are reframing the framework for how they engage with customers as well. I think that's extremely jarring. It's showing up in the numbers right now, and I really have nothing nice.
- Look at this reality. You mentioned reality. The CEO, David Gerard, saying on the call, quote, "On the margin, a whole bunch of people that would have been approved are no longer approved, in part because of rising rates."
- This company is still trading above its IPO price, for what it's worth.
- I like-- I like Sunny Jay, when it went public.
- At the end of 2020, ooh, at $20 a share. So it's still-- trying to look on the bright side of life here. But this, to me, is the first company that we've heard from where the downgrade to outlook seems to be exclusively because of a worsening economic and rate outlook. We haven't really heard any other company really as squarely lay the blame on that worsening economic outlook.
