Upstart (UPST) - This Is Bad

TL;DR

Upstart Holding, with a 70% stock decline over the past year, released Q3 guidance that fell $70 million short of expectations, causing a 9% decline in the stock price.

Transcript

when your stock is down over 70 percent over the last year and then you come out with a q3 guidance number that comes 70 million dollars underneath what the expectations were well yeah your stock's probably going to get hammered and we are seeing in the after hours upstart holding down nine percent basically giving back the nine percent gain it had... Read More

Key Insights

• 😀 Upstart's Q3 guidance and missed revenue expectations have caused concerns among investors, reflecting the challenges the company faces in the short term.
• 🥺 The company's operating expenses have outweighed its revenue growth, leading to an operating loss of $32 million.
• 🤨 Analysts project a potential slowdown in revenue growth, raising doubts about Upstart's ability to re-accelerate in the near future.
• 🤑 Upstart has been repurchasing its shares while borrowing money, but its declining financial performance raises questions about the effectiveness of these actions.
• 🍉 The stock has been in a long-term downtrend, and while there has been a flattening out recently, the overall trend remains negative.
• 🤑 Upstart's valuation of $2.5 billion may be seen as rich if it struggles to re-accelerate revenue growth.
• 🤕 Investors and analysts are looking for clarity on loan demand and Upstart's prospects heading into the next quarters.

Questions & Answers

Q: Why did Upstart Holding's stock experience a decline after the release of Q3 guidance?

Upstart Holding's Q3 guidance of $170 million fell short of expectations, causing concerns among investors about the company's potential challenges in the short term and resulting in a decline in stock price.

Q: How has Upstart's revenue growth been projected for the upcoming quarters?

Analysts estimate a considerable slowdown in revenue growth, potentially even going negative in the fourth quarter. However, there are expectations of re-acceleration in revenue growth in the second quarter of the next year.

Q: How have Upstart's operating expenses affected its profitability?

Upstart's operating expenses, including sales and marketing, customer operations, engineering, and product development, have significantly increased year over year, surpassing its revenue growth. This has led the company to experience an operating loss of $32 million.

Q: How has Upstart's stock-based compensation changed despite its declining stock performance?

Despite Upstart's declining stock performance, its stock-based compensation has almost doubled from $29 million to $55 million. This indicates that the company continues to offer compensation in the form of stock options despite financial challenges.

Summary & Key Takeaways

• Upstart Holding's Q2 revenues reached $228 million, a 17% year-over-year growth, but still fell $7 million short of expectations.

• Q3 guidance for Upstart came in at $170 million, well below the expected $246 million, showcasing potential challenges for the company in the short term.

• The company's operating expenses have significantly increased year over year, which has impacted its profitability.