Upstart Crashes 50% After Cutting Guidance, At Least 3 Firms Downgrade Stock By Investing.com

Shares of Upstart Holdings (NASDAQ:) are down nearly 50% in premarket trading Tuesday after the company slashed its FY revenue forecasts.

UPST Q1 revenue of $310.1 million, topping the consensus estimates of $303.3 million. The company reported a Q1 adjusted EPS of 61c, also above the analyst expectations of 53c per share.

For Q2, the AI lender expects revenue in the range of $295 million to $305 million, while analysts were looking for $337 million. Adjusted EBITDA is expected in the range of $32 million to $34 million, while adjusted net income is anticipated to range between $28 million and $30 million.

Upstart expects FY revenue of around $1.25 billion, down from its previous forecast of $1.4 billion and below the consensus projection of $1.41 billion.

“While this year is shaping up to be a challenging one for the economy, we know the drill and are confident that we can navigate whatever 2022 and beyond might hold,” CEO Dave Girouard said.

Citi analyst Peter Christiansen downgraded shares to Neutral from Buy with a $50.00 per share price target, down from $180.00.

“Our thesis going into 1Q’22 results recognized that consumer credit has been normalizing. Yet our expectation was that loan performance on recent issuance was somewhat expected, calibrated for, and perhaps performance benchmarks had been overly trend-fitted vs. less suitable trailing conditions… we had overestimated these assumptions – losing the forest through the trees,” the analyst said in a client note.

Stephens and Piper Sandler also cut their ratings on UPST stock. On the other hand, JMP analyst Andrew Boone weighed in more positively despite lowering the price target to $70.00 per share from $245.00 on rising headwinds.

“While we acknowledge the risk around credit conditions worsening, further rate increases, and Upstart now holding more loans on its balance sheet, we believe these factors are fully incorporated into our model (we lowered 2022 revenue by 11%), and with valuation reset (shares are down 46% in after-hours trading) estimates now look conservative to us and we believe numbers can begin to move higher from here,” Boone told clients.

By Senad Karaahmetovic