What happened

Shares of credit evaluation platform Upstart Holdings (UPST 2.76%) fell 11% in September, according to data provided by S&P Global Market Intelligence. There were indicators of further economic instability and dampening market enthusiasm in stocks with exposure to interest rate volatility. And investors were pessimistic with Upstart after a disappointing quarterly report in August.

So what

Upstart stock has been all over the place this year as investors go back and forth about how to price it. They were impressed with Upstart's first-quarter report in April when management told shareholders that it had inked important deals covering $2 billion in loans originated on its platform.

Despite otherwise disappointing results, investors were excited about the opportunity. Upstart stock was up as high as 400% this year.

However, that confidence collapsed after the second-quarter report in August. Sales continue to decline by wide amounts, and Upstart has been posting net losses. The company is also warning that the situation isn't likely to improve anytime soon.

Chief financial officer Sanjay Datta said, "In the short term, we remain circumspect about the timing of the recovery of borrower delinquency trends and the recovering health of the funding markets more broadly." Management is guiding for revenue to decrease 11% from last year and a net loss of $38 million.

Meanwhile, it continues to be conservative in scaling and loan approvals as it searches for more cost-cutting opportunities and tries to stem its losses.

Now what

Not everything was terrible in the report. Contribution margin, or the amount of sales that covers fixed costs, rose from 47% last year to 67% this year, and it's expected at 65% in the third quarter. 

Upstart is also launching its first home equity loans, addressing its largest addressable market. It plans to be able to approve applications for a home equity line of credit in 10 minutes online and close within five days, as compared with an industry average of one month. While that could be an exciting development, a suppressed housing market with few new homes for sale means that it could be challenging to get this product off the ground.

At the same time, the Federal Reserve kept interest rates stable this month but signaled that it would likely increase them again soon.

Upstart has lost most of its gains from this year and is a volatile, risky stock to own. It could have an incredible future, but it doesn't look like the right time to buy yet.