Shares of Upstart (NASDAQ:UPST) plummeted Tuesday after the artificial intelligence lending platform cut its full-year revenue outlook, citing rising interest rates and an uncertain economy.
The company had reported better-than-expected first-quarter results Monday after the bell, but also slashed its 2022 revenue forecast to $1.25 billion from a prior estimate of $1.4 billion.
Upstart expects second-quarter revenue of $295 million to $305 million, while analysts surveyed by Refinitiv predicted $335 million, on average.
"Given the general macro uncertainties and the emerging prospect of a recession later this year, we have deemed it prudent to reflect a higher degree of conservatism in our forward expectations,”" said CFO Sanjay Datta on Upstart’s earnings call Monday.
The company, which uses artificial intelligence to gauge creditworthiness, said climbing interest rates are hurting loan volume.
"In addition to increasing rates for approved borrowers, this also has the effect of lowering approval rates for applicants on the margin," said CEO David Girouard on the earnings call.
Upstart management indicated further economic challenges ahead as the Federal Reserve continues to hike rates and cut its balance sheet to tamp down on persistent inflation.
UPST shares opened Tuesday lower by $39.38, or 51.1% to $37.75.
