New York, May 09, 2024 - PRISM MarketView - The cloud-based AI lending platform, Upstart Holdings, Inc. (UPST) announced its first quarter earnings on Tuesday, after market close. The company beat on all earnings metrics mostly due to lower marketing costs but guided well below Street estimates for the second quarter citing adjusted net income of ~($36M) vs FactSet ($12.3M) and revenues ~$125M vs FactSet $145.3M. Upstarts outlook for the second half of 2024 also remains dismal due to poorer credit performance from more affluent borrowers. While guidance disappointed it wasn’t much of a surprise due to the “higher for longer” rate environment.
To add to the company’s woes, it also disclosed receipt of a SEC subpoena related to its use of AI in its models, with no ability to predict the outcome on the matter. The use of AI in lending has started to come under scrutiny by multiple regulatory agencies as possible biases or flawed criteria have the potential to produce negative outcomes. 90% of Upstart’s unsecured loans are fully automated. On the report, shares fell ~5% but have made a comeback today closing out the day up 13% leading the PRISM NextGen Tech and AI Index.
Fintech Upstart Says It Received SEC Subpoena on AI Model, Loans
(Bloomberg) -- Financial technology lender Upstart Holdings Inc. has been subpoenaed by Wall Street’s main regulator about disclosures, including its artificial intelligence models and loans, the company said Wednesday.Most Read from BloombergMicrosoft’s Xbox Is Planning More Cuts After Studio ClosingsAmericans Are Racking Up ‘Phantom Debt’ That Wall Street Can’t TrackStormy Daniels Will Return to Court in Test of Trump’s DemeanorTrump Judge Indefinitely Postpones Documents Case TrialUpstart, wh
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