After the company cut its FY revenues forecasts, shares of Upstart Holdings fell nearly 50% Tuesday in premarket trades

UPST Q1 Revenue was $310.1 Million, surpassing consensus estimates at $303.3 Million. Also, the company posted a Q1 adjustedEPS of 61c which was higher than analyst expectations at 53c per share.

Analysts were expecting revenue of $337 million for Q2. However, the AI lender anticipates revenue between $295 million and $305 million. An adjusted EBITDA range is between $32million and $34million, with an expected adjustment in net income of $28million to $30million.

Upstart projects FY revenue at $1.25B, down from $1.4B and less than the consensus forecast of $1.41B.

“While this year is shaping up to be a challenging one for the economy, we know the drill and are confident that we can navigate whatever 2022 and beyond might hold,” CEO Dave Girouard said.

Citi analyst Peter Christiansen downgraded shares, reducing the target price to $180.00 by lowering it to Neutral.

“Our thesis going into 1Q’22 results recognized that consumer credit has been normalizing. Yet our expectation was that loan performance on recent issuance was somewhat expected, calibrated for, and perhaps performance benchmarks had been overly trend-fitted vs. less suitable trailing conditions… we had overestimated these assumptions – losing the forest through the trees,” the analyst said in a client note.

Stephens and Piper Sandler both reduced their ratings for UPST stock. Andrew Boone from JMP was more positive, even though the price target for UPST stock has been lowered to $70.00 pershare (from $245.00) due to increasing headwinds.

“While we acknowledge the risk around credit conditions worsening, further rate increases, and Upstart now holding more loans on its balance sheet, we believe these factors are fully incorporated into our model (we lowered 2022 revenue by 11%), and with valuation reset (shares are down 46% in after-hours trading) estimates now look conservative to us and we believe numbers can begin to move higher from here,” Boone told clients.

By Senad Karaahmetovic