By most measures the stock should be soaring. Revenue grew 35% year over year to $265 million during its final quarter of fiscal 2025, and the company swung to a profit of $18.6 million.
Nevertheless, as of 12:35 p.m. ET Wednesday, shares of credit-scoring platform Upstart (UPST 5.13%) are down 13.5%. What gives?
The earnings miss compared to some (although not all) estimates is getting most of the quantifiable blame. The fact is, however, a handful of qualitative factors are responsible for most of today's tumble.
Unexpected changes
The quarter in question was a good one, showing continued progress for the alternative credit bureau. As was noted, revenue grew 35%, fueled by an 86% increase in loan originations. The company's projected 2026 sales of approximately $1.4 billion will also be a marked improvement on last year's comparison $1.0 billion.
There are a couple of credible concerns, however, clearly weighing on the stock.
NASDAQ: UPST
Key Data Points
One of these concerns is the now-imminent exit of co-founder and CEO Dave Girouard. Although he's to be replaced by fellow co-founder and current CTO Paul Gu, as of May it will be the first time the company's original chief executive won't be at the helm.
The other prod for today's pullback is Upstart's decision to stop providing quarterly guidance. It will instead limit its public outlooks to full-year estimates. While this is still adequate given that some companies don't provide any guidance at all, investors suddenly have less interim clarity than what they've grown accustomed to from Upstart.
A buying opportunity, sooner or later
The market's knee-jerk reaction makes enough superficial sense. Girouard and Upstart are very nearly synonymous. And, any changes to how companies offer transparency are always initially viewed through a lens of suspicion.
Image source: Getty Images.
Once the dust of this sell-off settles though, it's apt to look more like a buying opportunity than a warning. The company is still publicly committed to an annualized revenue growth rate of 35% through 2028, while analysts expect its top-line growth to accelerate from 2026's projected pace of 24.6% to a rate of nearly 34% in 2027. Upstart will also begin publishing its loan-origination metrics on a monthly basis, adding back some of the transparency that's being taken away by the discontinuation of quarterly guidance.
The big challenge from here will just be waiting for all of today's dust to settle.
