Upstart Stock Crashes: Here’s Why Traders Are Panicking on August 7, 2025
Another day, another fintech bloodbath—Upstart just joined the club.
The AI lender's reckoning: Shares nosedived after what analysts are calling 'a spectacular failure to read the room.' Turns out algorithmic loan approvals don't mix well with regulators who actually check math.
Short sellers feast: The same quant models that promised to disrupt credit scores are now generating perfect storm losses. Wall Street's latest 'disruptive tech' darling? More like disrupted margins.
Silver lining for crypto degens: At least decentralized lending protocols fail predictably—with smart contracts instead of SEC subpoenas.
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Upstart sinks despite strong Q2 results
By most measures, Upstart delivered a strong earnings update with its second-quarter release. The company posted earnings per share of $0.15 on sales of $257 million, crushing the average analyst estimate's calls for a per-share loss of $0.10 on sales of $225.4 million.
Loans originated through the company's artificial intelligence (AI) lending platform ROSE 159% year over year to reach nearly 372,600, and overall revenue was up roughly 101%. Even though the business posted an operating loss of $4.5 million in the period, performance from investments delivered an unexpected profit in the quarter.
Management even raised its full-year revenue outlook in conjunction with the report, but the beat-and-raise quarter hasn't been enough to prevent big sell-offs.
What's next for Upstart?
The company said that inflation continues to be a significant risk factor, and said it was seeing more competitive activity in the business' key service niches. On the other hand, it actually raised its full-year sales performance target to approximately $1.055 billion -- up from its previous guidance for about $1.01 billion.
With the stock seeing a big pullback despite a strong second quarter and encouraging performance outlook for the rest of the year, today's trading could present a worthwhile buying opportunity for risk-tolerant investors.
