Upstart Holdings Inc (NASDAQ:UPST) stock rose 1.50% (As on July 9, 11:22:14 AM UTC-4, Source: Google Finance) after the company is downgraded from Buy to Neutral by Julian Lin. The analyst expresses concern about the sustainability of the company’s growth amid heightened macro uncertainty, particularly following tariff escalations. “UPST is a difficult name to stand by in the current environment, but the company appears to be benefiting from strong fundamental momentum. The next many quarters will show if the company has truly made progress in improving its credit models, and successful execution may help the company sustain this high valuation multiple over the long term.”

Meanwhile, the first quarter earnings and revenue beat analyst expectations, but stock declined as investors focused on the company’s declining margins. The AI lending platform posted adjusted earnings per share of $0.30, surpassing the $0.17 consensus estimate. Revenue rose 67% year-over-year to $213.4 million, also topping expectations of $201.13 million. However, Upstart’s contribution margin fell to 55% from 59% in the year-ago quarter, signaling rising costs. In Q1, the company also finally launched the Upstart HELOC in California, bringing the footprint to 37 states plus Washington DC, now covering almost 75% of The U. S. Population. In Q1, the HELOC originations grew 52% quarter on quarter and more than 6x compared to a year ago. The company now have agreements signed with three lending partners for the HELOC product and have begun the process of moving funding off of the balance sheet. The small dollar product continues to perform well with originations growing 7% sequentially and almost tripling year on year. The STL continues to be a critical customer acquisition tool, accounting for nearly 16% of new borrowers on upstart in Q1.

For the second quarter, Upstart forecast revenue of $225 million, slightly below the $227.8 million analysts were expecting. The company raised its full-year 2025 revenue outlook to $1.01 billion, just above the $1 billion consensus. The company anticipates achieving GAAP net income positivity in the second half of 2025 and is targeting an adjusted EBITDA margin of 19%. Upstart also announced a new partnership with Walmart’s One Pay and plans to expand its offerings across the credit spectrum. The company maintains strong financial health with a current ratio of 14.31, indicating robust liquidity. Analysts forecast significant revenue growth of 48% for FY2025, supporting the company’s ambitious targets.