Upstart Shares Plunge 9.71% Despite 62% Volume Surge to $890M, 128th Highest in Market

Market Snapshot: Surging Volume Amid Sharp Price Decline

Upstart (UPST) experienced a significant drop in share price, falling 9.71% on November 5, 2025, despite a 62.33% surge in trading volume to $0.89 billion—the 128th highest volume in the market. This marked a stark reversal from the previous day’s performance, with the stock’s decline reflecting investor caution following mixed third-quarter results and weak forward guidance. The heightened volume suggests increased market activity, yet the sharp price drop underscores growing skepticism about the company’s near-term trajectory.

Key Drivers: Earnings Beat Overshadowed by Guidance and Model Uncertainty

Q3 Earnings Outperform but Revenue Misses

Upstart’s Q3 2025 results showed a strong non-GAAP earnings per share (EPS) of $0.52, exceeding estimates by 23.4%, and adjusted EBITDA of $71.16 million, surpassing forecasts by 27%. These metrics highlighted the company’s improving profitability, particularly against a backdrop of a 70.9% year-on-year revenue increase to $277.1 million. However, the $277.1 million revenue figure fell short of the $280.6 million analyst consensus by 1.3%, signaling underperformance on the top line despite robust growth. This discrepancy between earnings strength and revenue expectations contributed to investor disappointment.

Weak Q4 Guidance and Strategic Uncertainty

The stock’s decline was further exacerbated by management’s Q4 2025 revenue guidance of $288 million at the midpoint, which came in 6.1% below the $306.6 million Wall Street estimate. Analysts viewed this as a sign of slowing growth momentum, particularly as Upstart’s EBITDA guidance for the quarter ($63 million) also lagged behind expectations. The company attributed the weaker outlook to macroeconomic caution, but investors interpreted the guidance as a sign of potential challenges in scaling its AI-driven lending model. This created uncertainty about Upstart’s ability to maintain its high-growth trajectory, particularly in a competitive fintech landscape.

AI Model Adjustments and Operational Challenges

A critical factor behind the stock’s volatility was the performance of Upstart’s AI lending platform. The company reported $2.9 billion in loan originations for Q3, a 80% year-on-year increase, but this fell short of the $3.3 billion analyst consensus. CEO Dave Girouard explained that the AI model had “tightened the credit box” in response to macroeconomic signals, leading to a 14.8% drop in shares despite strong profitability. This adjustment raised questions about the model’s responsiveness to market conditions and its potential to overcorrect, creating short-term volatility in loan volumes. Analysts from Jefferies and others noted confusion around the AI’s behavior, with some suggesting it signaled operational inefficiencies in balancing risk and growth.

Analyst Sentiment and Market Positioning

While Upstart’s long-term revenue growth of 35.8% CAGR over five years and its expanding partnership network (including new credit unions) were seen as positives, the stock’s technical indicators painted a bearish picture. A 14-day RSI of 37.62 and all major moving averages above the current price suggested oversold territory but also reinforced caution. Analysts remained divided: J.P. Morgan upgraded the stock to Neutral with a $79 target, citing “strong AI momentum,” while BofA Securities reduced its price target to $71, reflecting concerns over guidance. The mixed sentiment was compounded by insider selling activity and a high debt-to-equity ratio (2.04), which added to market skepticism about valuation and operational scalability.

Sector Context and Competitive Pressures

Upstart’s performance must be viewed within the broader fintech sector, where peers like SoFi and LendingClub reported strong Q3 results. However, Upstart’s reliance on AI-driven underwriting, while innovative, exposed it to unique risks. The recent selloff in fintech stocks, including Affirm (AFRM), highlighted sector-wide volatility, with investors prioritizing earnings certainty over growth narratives. Upstart’s ability to differentiate itself through its 2,500-variable AI model and expanding lending partnerships will be critical, but the recent guidance and operational hiccups have left the market questioning whether its AI edge is sufficient to sustain momentum.

Conclusion: Balancing Growth and Execution Risks

Upstart’s Q3 results underscored its dual nature as a high-growth AI fintech: a strong earnings beat and record loan volumes demonstrated the platform’s potential, but weak guidance and AI model adjustments exposed execution risks. While long-term analysts remain bullish on its $1 billion revenue target for 2025, the near-term outlook hinges on resolving operational uncertainties and regaining investor confidence. The stock’s sharp decline, though volatile, reflects a market demanding clearer signals on scalability and consistency in a competitive, macro-sensitive sector.