UPST - Is Upstart About to Solve Its Biggest Problem?
2024-02-17 07:55:00 ET
Few companies have suffered as much from the Federal Reserve's interest rate campaign as Upstart (NASDAQ: UPST) . Shares of the AI-based consumer lending company have fallen as much as 97% from peak to trough and are still down more than 90% from their peak in 2021. During the heady days of the pandemic, Upstart was growing at a blistering pace with revenue more than tripling, and it reported mid-teens profit margins even on a generally accepted accounting principles ( GAAP ) basis.
However, the Fed's rapid interest rate hikes to bring inflation under control have quashed demand for Upstart's loans, and the regional banking crisis also made its lending partners more cautious about taking on its loans.
Investors have had to be patient as Upstart's business has been down while rates remain high, and they got some more bad news in the company's fourth-quarter earnings report after Upstart beat estimates but offered disappointing first-quarter guidance. The stock was down by double-digit percentages in after-hours trading on Tuesday.
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Is Upstart About to Solve Its Biggest Problem?