Stock Of Upstart Company Rises 40% After Upbeat Earnings Outlook And Progress On Funding

After reporting a revenue decline of over two-thirds in the latest quarter, financial services company Upstart Holdings Inc.'s shares surged 40% higher in after-hours trading Tuesday, as it delivered an optimistic outlook for the current period. 

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Upstart uses artificial intelligence to inform lending decisions and has faced challenges recently, having to price its loans at higher rates that have affected demand and funding partners pulling back due to the economy. 

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However, Upstart signaled some progress on the funding front in its latest report, securing multiple long-term funding agreements to deliver more than $2 billion to the platform over the next year. 

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For the current quarter, Upstart executives predict $135 million in revenue and breakeven performance on earnings before interest, taxes, depreciation, and amortization (EBITDA), exceeding FactSet's projected $125 million revenue and $14 million adjusted EBITDA loss. 

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In contrast, the first quarter of 2021 showed a net loss of $129 million, while revenue sank to $103 million from $310 million a year before, as loan originations dropped 78% to just over 84,000 loans. 

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Despite the challenging macroeconomic environment, the company attributes the improving guidance to tenacious execution, operating discipline, margin expansion, and deal-making.

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