Upstart (UPST) Plummets 10.8%: Earnings Miss and Cash Flow Woes Spark Sell-Off

Summary
• Upstart (UPST) slumps 10.8% to $41.24, marking its worst intraday drop since Q3 2024
• Q3 revenue of $277.11M misses estimates by $8.11M, while adjusted EPS of $0.23 falls 47% below expectations
• Operating cash flow turns negative at -$256.28M, contrasting with $71.16M adjusted EBITDA growth

Upstart’s stock has plunged to a 14-month low amid a double earnings miss and deteriorating cash flow metrics. The fintech lender’s Q3 results, coupled with soft Q4 guidance, have triggered a sharp selloff. With the stock trading 10.8% below its previous close and near its 52-week low of $31.40, investors are reassessing the company’s growth trajectory and financial health.

Earnings Miss and Cash Flow Deterioration Trigger Panic
Upstart’s Q3 earnings report delivered a double blow to investors: revenue of $277.11M fell short of the $285.22M estimate, while adjusted EPS of $0.23 lagged the $0.43 consensus. Despite 71% YoY revenue growth and $2.9B in loan originations, the company’s operating cash flow turned negative at -$256.28M, and free cash flow plummeted to -$270.58M. Management’s Q4 guidance—$288M revenue and $63M adjusted EBITDA—fell below expectations, signaling structural challenges in scaling profitability. The stock’s collapse reflects fears of liquidity constraints and a widening gap between operational metrics and financial performance.

Consumer Finance Sector Volatile as Affirm (AFRM) Also Retreats
The consumer finance sector remains under pressure, with Affirm (AFRM) down 2.05% as of 14:49 ET. While Upstart’s decline is sharper, both stocks face scrutiny over AI-driven lending models and regulatory risks. The CFPB’s recent focus on algorithmic fairness and debt collection practices adds sector-wide uncertainty. Upstart’s cash flow struggles contrast with Affirm’s stronger liquidity position, but both face questions about long-term profitability in a tightening credit environment.

Bearish Options and ETFs Highlight Short-Term Volatility
• 200-day MA: $59.29 (well below current price)
• RSI: 40.86 (oversold territory)
• MACD: -2.63 (bearish divergence)
• Bollinger Bands: Price near lower band at $44.98

Upstart’s technicals suggest a short-term bearish bias, with key support at $44.98 (lower Bollinger Band) and resistance at $49.71 (20-day MA). The stock’s 10.8% drop has created high-conviction options opportunities. Two top picks from the options chain are:

• UPST20251114P42 (Put, $42 strike, Nov 14 expiry):
- Implied Volatility: 84.96% (high)
- LVR: 15.94% (moderate leverage)
- Delta: -0.5065 (moderate sensitivity)
- Theta: -0.0195 (low time decay)
- Gamma: 0.0684 (responsive to price swings)
- Turnover: $25,393 (liquid)
This put option offers a 24% price change potential if the stock breaks below $42. A 5% downside scenario (to $39.18) would yield a $2.82 payoff, making it ideal for a short-term bearish bet.

• UPST20251121P42 (Put, $42 strike, Nov 21 expiry):
- Implied Volatility: 82.49% (high)
- LVR: 12.95% (moderate leverage)
- Delta: -0.4900 (moderate sensitivity)
- Theta: -0.0299 (low time decay)
- Gamma: 0.0541 (responsive to price swings)
- Turnover: $174,869 (high liquidity)
This put option, with higher turnover, provides a 25% price change potential. A 5% downside to $39.18 would generate a $2.82 payoff, making it a safer play for a slightly longer time horizon.

Action: Aggressive bears should prioritize UPST20251121P42 for its liquidity and moderate leverage. If the stock breaks below $42, consider scaling into the position.

Backtest Upstart Stock Performance
It looks like the automatic step that should have filtered the “-11 % intraday-low” event dates ran into an internal error (“code_result not found”). That means the system couldn’t finish extracting the exact list of plunge dates from the raw price file we just downloaded.Two practical ways to move forward:1. Retry the automated extraction (I’ll re-submit the request with an adjusted specification for the calculation engine that explicitly tells it to detect days whose intraday low ≤ 89 % of the prior close). 2. If you already have (or can easily export) the list of those dates, you can paste them here and I’ll continue the back-test immediately using a manual event-date list.Which approach would you prefer?

Urgent Action Needed: Watch $42 Support and Sector Sentiment
Upstart’s selloff reflects a breakdown in investor confidence, driven by earnings misses and cash flow red flags. The stock’s 10.8% drop has created a short-term trading opportunity, particularly for bearish options. Key levels to monitor include $42 (critical support) and $49.71 (20-day MA). The sector’s broader weakness, with Affirm (AFRM) down 2.05%, suggests systemic risks for AI-driven lenders. Investors should prioritize liquidity and volatility metrics, using the options chain to hedge or capitalize on near-term swings. Act now: Target UPST20251121P42 if the $42 level breaks, and watch Affirm’s performance as a sector barometer.