A securities class action has been filed against Upstart Holdings, Inc. (UPST) on behalf of persons and entities that purchased or otherwise acquired Upstart Holdings securities between November 9, 2021 through May 9, 2022. This case has been filed in the USDC – N.D.CA.
On May 9, 2022, after the market closed, Upstart announced its first quarter 2022 financial results in a press release. Therein, the Company reduced its fiscal 2022 guidance, expecting revenue of approximately $1.25 billion and contribution margin of 48%. During the related conference call, Upstart’s Chief Financial Officer cited “rising interest rates and rising consumer delinquencies [as] putting downward pressure on conversion.”
On this news, the Company’s stock price fell $43.52, or 56%, to close at $33.61 per share on May 10, 2022.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Upstart’s AI model could not adequately account for macroeconomic factors such as interest rates that impact the market-clearing price for loans; (2) that, as a result, Upstart was experiencing negative impact on its conversion rate; (3) that, as a result, the Company was reasonably likely to use its balance sheet to fund loans; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis.