What happened

Shares of Upstart Holdings (UPST 0.71%), the artificial-intelligence powered, cloud-based lending platform, plummeted Wednesday to close the session down 12.6%. The company had only itself to blame after announcing plans that will cause stock dilution.

So what

After watching its stock price surge to six times in value in the four months since its December IPO, Upstart decided to cash in last night. The fintech announced it will sell at least 2 million new shares of common stock, and as many as 2.3 million.  

Upstart said it will use the proceeds from the sale for general corporate purposes.

Now what

Upstart has not yet announced the shares' sale price, so it's not yet clear how much those proceeds will be. Investors should be prepared to see a second wave of selling pressure, though, if Upstart sets the price too far below the approximately $126 level at which shares closed Wednesday.

And that's a warning shareholders probably don't want to hear, on a day when the company just suffered a 12% sell-off in response to news of just 3% stock dilution. But with Upstart stock selling for more than 38 times sales (let alone earnings) even after today's sell-off, the next step down could be another doozy.