Upstart Holdings Inc. witnessed a dramatic selloff in its stock price after releasing quarterly results that featured a disappointing outlook, overshadowing what had been some solid performance metrics in the reported quarter.
Trading Floor Turmoil
The AI-driven lending platform’s stock collapsed by more than 14% during early Wednesday trading. This steep decline followed an after-hours drop of 6.1% on Tuesday. The selloff pushed the share price decisively below the psychologically significant $40 threshold—a level not breached since late April. Current trading places the stock well below its key technical indicators, including the 50-day moving average of $57.53 and the 200-day moving average of $59.29, confirming a bearish technical posture.
A Quarter of Contrasts
For the third quarter of 2025, Upstart posted revenue of $277.11 million. This represents a robust year-over-year increase of 70.9%. However, this figure narrowly missed the consensus estimate of $279.62 million. The company delivered a stronger performance on profitability, reporting an adjusted earnings per share of $0.52, which comfortably surpassed the $0.42 forecast by analysts.
Despite these headline numbers, several key operational metrics fell short:
* The total volume of loans facilitated was $2.9 billion, missing the projected $3.2 billion.
* Overall transaction volume came in 13% below market estimates.
* Fee revenue totaled $258.5 million, falling short of the anticipated $275.7 million.
Should investors sell immediately? Or is it worth buying Upstart Holdings?
Cautious Outlook Sparks Investor Flight
The primary catalyst for the severe market reaction was management’s subdued guidance for the upcoming fourth quarter. Upstart projects revenue of approximately $288 million, significantly lower than the $303.7 million analysts had expected. Consequently, the full-year revenue forecast was trimmed to about $1.035 billion, down from a previous guidance of $1.055 billion.
Further details of the revised projections include:
* Q4 adjusted EBITDA is now anticipated to be around $63 million, compared to an expectation of $70.7 million.
* The forecast for full-year 2025 fee revenue was reduced to $946 million from $990 million.
* In a brighter spot, net interest income for the year was raised to $89 million, up from the previous $65 million.
Wall Street Responds with Downgrades
Financial analysts moved swiftly to adjust their valuations in response to the earnings report and guidance. Stephens slashed its price target from $55 to $40, while Needham made a deep cut, reducing its target from $82 to $56. Bank of America also revised its target downward, from $81 to $71. Although the average analyst price target across the board remains at $78.45, these recent adjustments highlight growing skepticism.
From a technical perspective, the Relative Strength Index (RSI) reading of 37.62 suggests the stock is in oversold territory, which could potentially attract bargain-seeking investors. However, fundamental metrics paint a challenging picture: the company’s three-year revenue growth rate stands at -7.7%, its profit margin remains negative, and it carries a substantial debt load with a debt-to-equity ratio of 2.04.
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