Why Is Upstart (UPST) Stock Plunging 60% Today?

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Upstart (NASDAQ:UPST) stock is falling hard on Tuesday following the release of its earnings report for the first quarter of 2022.

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The rost news for Upstart from its most recent earnings report is in its outlook. Starting with the second quarter 2022 guidance, the company expects revenue of $295 million to $305 million. This would see it missing Wall Street’s estimate of $334.81 million for the quarter.

Moving on to its outlook for the full year of 2022, revenue guidance comes in at $approximately $1.25 billion. Yet again, that would be well below analysts’ estimate of $1.4 billion for the year.

So what’s behind that low guidance? Here’s what Upstart CFO Sanjay Datta said in the company’s Q1 conference call.

“The combination of inflation and monetary tightening imply the non-trivial risk of a recession potentially later this year. Given the general macro uncertainties and the emerging prospects of a recession later this year, we have deemed it prudent to reflect a higher degree of conservatism in our forward expectations.”

Adding to all of this are mixed results for the first quarter of the year. Upstart reported adjusted earnings per share of 61 cents on revenue of $310 million. Wall Street was looking for an adjusted EPS of 51 cents on revenue of $313.98 million.

And this also has UPST stock seeing heavy trading this morning. As of this writing, more than 12 million shares of the company’s stock have changed hands. That’s already surpassed its daily average trading volume of about 12.1 million shares.

UPST stock is down 52.6% as of Tuesday morning.

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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.