Upstart's stock extends declines as the AI lender predicts slower growth

By Emily Bary

Upstart's December-quarter revenue is expected to slow more than Wall Street had been modeling

Upstart saw 80% growth in loan originations during the September quarter.

An earlier version misstated Upstart's revenue figures. They have been updated.

Lending company Upstart Holdings expects its growth to slow going forward - and by more than Wall Street was expecting.

Shares of the financial-technology company, which uses AI to inform lending decisions, fell 15% in Tuesday's extended trading following downbeat guidance for the December quarter. Upstart's (UPST) management is targeting $288 million in revenue, up 32% from a year before, while the FactSet consensus was for $304 million.

That would also mark a dramatic slowdown from the 71% growth rate seen in the September quarter, which resulted in $277 million in revenue, versus the $280 million consensus view.

The after-hours stock slide would be on top of to a 25% year-to-date decline sustained through the regular-session close.

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"Our AI platform is performing exactly as designed, rapidly adapting to evolving macro signals while delivering strong results," CEO Dave Girouard said in a release.

Upstart grew loan originations at a faster rate -80% - than it did revenue, and Girouard called out "a sixfold sequential increase" in net income on a GAAP basis.

On Upstart's earnings call, he said that "the opportunity for AI in credit is unimaginably large, and there's no one better positioned than Upstart to lead this trillion-dollar industry to this exciting and inevitable direction."

He also said Upstart's underwriting models have responded well to fluctuations in industry conditions, but overall he's seen stable trends among the company's customer base.

Girouard said he has seen "no material deterioration in consumer credit strength" - and better yet, "recent signs of improvement."

Upstart's management seemed to push back on the notion of a K-shaped economy that is said to benefit upper-income consumers as lower-income individuals have struggled, and that an analyst recently said has helped lending rival SoFi Technologies (SOFI).

Those with sub-660 credit scores, according to Upstart's earnings-call commentary, are in decent shape relative to pre-COVID default trends, and those with 800-plus credit scores are "doing very well." But default rates are "quite elevated" for consumers with credit scores in the "720 to 750" range. That suggests more of a U-shape, the company said.

Shares of Upstart often take big swings after earnings: Prior to this latest report, eight of the past 10 post-earnings moves have been by a double-digit rate.

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-Emily Bary

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11-04-25 2008ET