The San Mateo-based fintech saw its stock drop to $33.06, extending a year-long decline that has wiped out roughly 51% of its market value. The sell-off was triggered by Upstart’s guidance for a full-year adjusted EBITDA margin of approximately 21%, translating to roughly $294 million. This figure landed significantly below the $325.3 million projected by analysts, according to a report from Truist Securities.

Shifting Product Mix

Analysts at JP Morgan attributed the disappointing margin outlook to the company’s evolving portfolio. Upstart is increasingly leaning into lower-yielding lending products, such as auto loans and HELOCs. While these diversify the company’s offerings, they typically carry thinner margins than the core personal loan business, creating a near-term drag on investor sentiment despite higher volume.

Despite the margin concerns, Upstart’s fourth-quarter performance showed signs of operational recovery. The company reported a profit of $18.6 million, a sharp reversal from the $2.8 million loss recorded during the same period last year. In tandem with the financial results, the board appointed co-founder Paul Gu as the next chief executive officer. Gu takes the helm from fellow co-founder Dave Girouard, who will remain with the company as executive chairman.

The company’s top-line projections provided a rare bright spot, with full-year revenue guidance exceeding FactSet consensus estimates. However, the market’s focus remained fixed on the compression of margins as Upstart navigates a more complex credit environment and a fundamental shift in its lending strategy.