Upstart
- Upstart stock dropped as much as 23.5% in Wednesday trading despite beating earnings expectations.
- The lending software company offered lower guidance for the fourth quarter.
- Upstart is coming off a strong recent rally of 129% over the past three months.
Upstart stock plummeted as much as 23.5% Wednesday as the lending software company sees EBITDA slipping in the current quarter.
The sell-off came despite strong third-quarter results. Net income tripled from a year ago to $29.1 million, topping Wall Street forecasts for $20 million. Revenue soared 249% to $228.5 million, beating analyst expectations of $214.9 million.
But management sees fourth-quarter EBITDA falling to $51 million-$53 million from $59.1 million in the third quarter.
Analysts at Bank of America cut their price target on Upstart stock to $255 and maintained an underperform rating.
Shares were down 18% at $256.11 at 12:01 p.m. ET after diving as low as $239.98 earlier. Wednesday's plunge follows a recent rally for Upstart stock, which before this week was up 129% over the past three months, and 670% so far on the year.
The company, which uses artificial intelligence to determine loan eligibility, first went public in December 2020.
Upstart connects banks with customers interested in taking out loans, then it collects referral fees from partner banks but doesn't do the lending itself.
According to Upstart, its AI technology makes lending decisions based on considerations from over 1,600 data points, which allow it to reduce risk while facilitating lower rates for loans.
"Since Upstart's IPO a year ago, we've more than tripled our revenue, tripled our profits, tripled the number of banks and credit unions on our platform, and tripled the number of auto dealerships we serve," said Upstart CEO Dave Girouard.