Upstart (UPST) stock plummets 18% as significant outlook miss overshadows FQ4 results

Upstart Holdings (NASDAQ: UPST) reported fourth-quarter revenue that exceeded analysts’ expectations but shares tumbled over 18% in premarket trading Wednesday as the FQ1 outlook came in well below estimates.

For FQ4, Upstart reported loss per share of $0.11, meeting the consensus estimates. The company's revenue reached $140.31 million, topping the projected $134.83 million.

Its contribution profit saw a year-over-year increase of 17%, totaling $95.6 million, slightly above the anticipated $94.1 million.

Adjusted EBITDA turned positive at $0.62 million, a noteworthy improvement from the previous year's $16.6 million loss, and better than the expected loss of $0.73 million.

"Despite the difficult lending environment, we delivered solid results to end the year," said Dave Girouard, CEO of Upstart said.

Looking ahead to the first quarter of 2024, Upstart anticipates revenue to be around $125 million, with a contribution margin of about 61%.

Net loss for the quarter is expected at around $75 million.

According to Morgan Stanley’s analysts, Upstart’s FQ1 outlook is “meaningfully below expectations and calls into question the magnitude of origination volume recovery we may see in '24.”

“While persistently elevated take rates may support revenue, we remain focused on relative credit performance as origination volumes sequentially rise throughout '24,” analysts led by James E. Faucette said in a note.

Moreover, Morgan Stanley lowered its forecasts for loan originations and profit expectations, but they have increased their revenue projections due to consistently high take rates.

By Vahid Karaahmetovic

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