On Tuesday, the stock market’s first trading day of the year, shares of Upstart plummeted almost 60% following the artificial-intelligence lending firm cut its full-year revenue forecast and stated concerns over a recession.
Upstart (Ticker: UPST) stated it expects revenue of $1.25 billion in 2022, down from its previous goal of $1.4 billion. The firm said second-quarter sales will be around $295 million to $305 million, compared to Wall Street expectations of $335 million.
“Despite the fact that the economy looks to be a difficult year, we’ve done this dance before and are confident we’ll get through whatever 2022 and beyond throws at us,” said Chief Executive Dave Girouard in a press release.
The company’s CEO noted on the conference call that the Federal Reserve has been aggressive in attempting to cool inflation by raising interest rates.
“Given the hawkish signals from the Fed, we expect prices to rise even more in the near future, which will have an impact on our transaction volume all else being equal,” Girouard added.
The possibility of a downturn later this year has increased, according to Chief Financial Officer Sanjay Datta, who cited “rising interest rates and greater inflation and monetary tightening from the Fed,” implying that “the non-trivial chance of a recession in the near future.”
“Given the overall macro uncertainties and the potential for a recession later this year, we have decided to be more conservative in our future expectations,” Datta continued.
Upstart stock is plugged 60% today following their announcement of lowered expectations for the year. The company stated that they’ve done this before and are confident they’ll get through whatever is thrown at them in the upcoming months. Despite this, many are concerned about a potential recession later on in the year. Only time will tell how Upstart will fair in the future.
What do you think about this? Will Upstart be able to make a comeback or are they doomed? Let us know in the comments below!
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