Lending firm Upstart’s shares tank on dismal revenue view; Affirm slumps

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May 10 (Reuters) – Shares of Upstart Holdings (UPST.O) plunged nearly 60% on Tuesday after the AI-driven lending platform cut its full-year revenue forecast, anticipating falling demand for loans amid rising interest rates in the United States.

The fintech company’s stock was on track to erase most of its gains since going public in December 2020, the latest pandemic favorite to face the brunt of the end of loose monetary policy.

Average loan pricing on Upstart’s platform rose increased more than 300 basis points since October, the company said on its conference call.

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Upstart, which makes most of its money from fees paid by banks using its platform, lowered its annual revenue target to $1.25 billion from $1.40 billion earlier as it expects loan volumes to take a hit this year.

Buy now, pay later lender Affirm (AFRM.O) slumped 15% as Upstart’s results triggered concerns about the health of the broader consumer lending business. Affirm is slated to report third-quarter results on Thursday.

“If companies are not profitable and are not generating cash flow in a rising rate environment and a draining liquidity environment, many investors can’t justify owning them,” said Thomas Hayes, chairman at Great Hill Capital in New York.

Consumer lenders LoanDepot Inc (LDI.N) and LendingClub Corp (LC.N) declined 20% and 7.3%, respectively. PayPal Holdings Inc (PYPL.O) and Block Inc (SQ.N), which have pushed into BNPL, slipped 1.3% and 2.1%, respectively.

Online lender SoFi Technologies Inc (SOFI.O) tumbled 18% before being halted amid reports its first-quarter results were leaked ahead of its scheduled release after-market on Tuesday.

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Reporting by Medha Singh and Anisha Sircar in Bengaluru; Editing by Devika Syamnath and Sriraj Kalluvila

Our Standards: The Thomson Reuters Trust Principles.

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Tama Schroeder