Shares of Upstart Holdings Inc. tumbled in after-hours trading on Tuesday after the lending company fell short of Wall Street’s expectations for its revenue and earnings projections for the current quarter.
Second-Quarter Performance
In the second quarter, Upstart reported a net loss of $28.2 million, or 34 cents per share, compared to a loss of $29.9 million, or 36 cents per share, in the same period last year. Adjusted earnings came in at 6 cents per share, falling short of the estimated loss of 7 cents per share projected by analysts tracked by FactSet.
While revenue dropped to $136 million from $228.2 million, it exceeded the FactSet consensus of $135.2 million. The total fee revenue generated by the company was $144 million, surpassing analysts’ expectations of $131 million.
Loan Activity
During the second quarter, Upstart’s lending partners originated 109,447 loans worth a combined $1.2 billion. However, the conversion rate for rate requests decreased to 9% from 13% in the same period last year.
Disappointing Q3 Outlook
For the third quarter, Upstart anticipates revenue of $140 million, falling short of analysts’ expectations of $155.3 million. The company also projects adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) of $5 million, compared to analysts’ estimate of $9.6 million.
CEO Optimism
Despite the challenging economic environment, Chief Executive Dave Girouard remains optimistic about Upstart’s future growth and profitability in a normalized economy.
Stock Performance
Upstart Holdings’ stock has witnessed an impressive surge of 291% year-to-date as of Tuesday’s market close. In comparison, the S&P 500 has risen by 17%.
