Upstart's Q3 Miss: What Happened to the Stock Price and Why?

Upstart's AI Hype Train Derailed? More Like Crashed and Burned

So, Upstart (UPST). Another AI darling that promised to reinvent the wheel, this time in the oh-so-sexy world of… lending. And how's that working out for them? Not great, Bob!

Shares tanked 6% after hours. Why? Because their Q4 guidance was softer than a baby's butt, and their Q3 results were a mixed bag. Revenue of $277.11M missed the $285.22M estimate. I mean, come on, they couldn't even hit that number? Upstart Holdings Down 6% in After Hours Following Q3 Earnings Miss

The Numbers Don't Lie (But They Can Be Misleading)

Okay, let's be fair (ugh, I hate being fair). Revenue did climb 71% year over year, and loan originations jumped 80% to $2.9B. They even managed to claw their way back to GAAP profitability with a net income of $31.81M. Sounds impressive, right?

Hold your horses.

Operating cash flow went negative. Like, really negative: -$256.28M. Free cash flow? -$270.58M. That's not just a stumble; that's a face-plant into a pile of financial manure. They're burning cash faster than I burn through coffee on a Monday morning.

And here's the kicker: they’re bragging about their AI. CEO Dave Girouard spouted some PR drivel about "rapid growth, profitability, and AI leadership." Give me a break. If your AI is so damn good, why are you bleeding cash? Why did the company miss revenue expectations? Are we just supposed to nod along and pretend like everything's fine?

Ninety percent of loans are fully automated? So what? Doesn't mean they're good loans. It just means their algorithm is churning out decisions faster, potentially making mistakes at scale. Remember when everyone thought self-driving cars would be everywhere by now? Yeah, how's that going? This feels like the same hype cycle all over again.

The Cash Flow Conundrum

Management will "likely address the gap" between the strong operational metrics and the missed estimates. Translation: they'll try to spin it. They'll blame "macroeconomic uncertainty" or some other vague excuse. But let's be real: negative cash flow ain't something you can just brush under the rug.

They've got $2.16B in total liabilities against $489.78M in cash. Sounds like they're playing a dangerous game. It's like maxing out your credit cards to buy lottery tickets – sure, you might win big, but you're probably just digging yourself into a deeper hole. What happens when the music stops? Will they need a bailout? Or will they just quietly fade away like so many other overhyped tech companies?

Speaking of bailouts, it reminds me of the last time I tried to fix my garbage disposal myself. Ended up flooding the kitchen and calling a plumber anyway. Cost me a fortune. Maybe Upstart should just hire some old-school loan officers instead of relying on their "AI." Just a thought.

Offcourse, they're trying to paint a rosy picture. But I'm not buying it. This whole thing smells fishier than week-old sushi.

So, What's the Real Story?

It's simple: Upstart is another overhyped tech company riding the AI wave. They're burning cash, missing estimates, and relying on buzzwords to keep investors interested. The emperor has no clothes, and anyone who can see past the PR spin knows it. The worst part? People will still throw money at this thing, hoping to get rich quick. It's the oldest trick in the book, and it still works. Ain't that a kick in the teeth?