Why Upstart Stock Lost 29% in 2025

Core Viewpoint - Upstart Holdings experienced significant volatility in its stock price, finishing the year down 29% despite strong business growth driven by a new AI model and falling interest rates, primarily due to rising credit risk concerns [1]. Business Performance - Upstart's revenue surged by 79% to $747.8 million through the first three quarters of the year, with a GAAP net income of $35 million, a notable recovery from a loss of $125.8 million in the same period the previous year [5]. - The company provided optimistic guidance for the fourth quarter, indicating expectations for continued growth and improved profitability [5]. Market Conditions - The stock saw gains of over 25% on two occasions during the year but ultimately lost those gains, reflecting the stock's volatility [2]. - Broader economic concerns, particularly rising credit risks and a weakening labor market, negatively impacted the stock towards the end of the year, despite management's confidence in their credit models [6][9]. Future Outlook - Heading into 2026, Upstart is expected to face similar economic challenges as in late 2025, with a weak labor market potentially leading to increased delinquencies in the credit market [9]. - However, Upstart's business is positioned stronger than it was during its decline in 2022, with its credit models performing well thus far [9].