Upstart Holdings (NASDAQ:UPST) plunged more than 25% Wednesday after missing top and bottom-line consensus estimates in the third quarter.
The company reported a loss per share of $0.05, $0.03 worse than the analyst estimate of a $0.02 loss per share. Revenue for the quarter came in at $135 million, down 14% YoY and below the consensus estimate of $139.76 million.
Total fee revenue was $147 million, a decrease of 18% year-over-year.
The company said lending partners originated 114,464 loans, totaling $1.2 billion across its platform in the quarter, down 34% from the same quarter of the prior year. Conversion on rate requests was 9.5%, down from 9.7% in the same quarter of the prior year.
UPST co-founder and CEO Dave Girouard stated: "Of course we'd prefer to be growing quickly, but this is a time when it's wise to be operating in a conservative mode. We were EBITDA positive for the second straight quarter, our contribution margins are still near record highs, and we continue to invest in our teams and core AI."
He added that the company is "making rapid progress in building the world's first and best AI lending platform."
Looking ahead, UPST sees Q4 2023 revenue of $135 million versus the consensus of $157 million. Q4 revenue from fees is expected to be approximately $150 million.
Reacting to the report, analysts at BTIG maintained a Buy rating on the stock but cut the price target in half to $32 from $64 per share.
"Similar to last qtr, Upstart posted a mediocre top line, as they continue to be hampered by an outlook for a more constrained consumer, as well as higher rates," the analysts wrote.
"This contributes to loans pricing above 36% on Upstart's risk model, which is above their hard ceiling. Below the line, the quarter was mixed, and we expect these trends to continue until we get clarification on possible rate cuts from the fed, as well as signs of improvement in the macro environment," they added.
BTIG believes the macro environment "should round the corner, possibly in May 2024," and UPST's share price performance should likely follow.