Upstart Reducing Full Year Revenue Aspirations

Shares of artificial intelligence lending company Upstart lose half its value after lowering revenue expectations for this year

Shares of Upstart plunged after the AI-powered lending platform scaled back full-year revenue expectations, citing rising interest rates and instability in the economy.

The company published better-than-expected results during the first quarter, but with the reduction of its 2022 revenue expectations from $1.4 billion to 1.25 billion, and Upstart stated that it expects revenues during the second quarter ranging between $295-305 million, while analysts believe that revenue should reach an average to $335 million, sending the stock down 56.4% during trading that was halted shortly after the US market opened.

The company, which uses artificial intelligence to measure the creditworthiness of a borrower, stated that higher interest rates are hurting loan volumes, and the Upstart management pointed to the economic challenges ahead as the Federal Reserve continues to raise interest rates and reduce the budget to tackle the ever-increasing inflation.

In addition, the company indicated that loan default rates are returning to normal, as during the pandemic, default rates and delays have reached their lowest levels in decades amid government aid and fiscal stimulus programs that have been introduced.

Upstart stock received a set of pessimistic expectations from Wall Street analysts at Goldman Sachs, Pepper Sandler, Citigroup and Stevens after the quarterly results report, as Arvind Ramnani, a famous analyst at Pepper Sandler, reduced the stock’s expectations to neutral rates and cut the price target significantly Sharp from $230 to $44 per share, which is about 75% below the last closing price of Upstart stock.

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