Tuesday's Headlines: Upstart Plummets Pre-Market

Tuesday's Headlines: Upstart Plummets Pre-Market

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Redfin (RDFN) +16.5%

Stitch Fix (SFIX) +13.8%

Nautilus (NLS) +12.7%

Upstart Holdings (UPST) +9.0%

Farfetch (FTCH) +8.7%

Moving Down ⬇️

Duolingo (DUOL) -7.1%

Chegg (CHGG) -4.9%

Trip.com Group (TCOM) -4.1%

Constellation Brands (STZ) -3.9%

Avalara (AVLR) -3.9%
 

Here are the stories that you need to know ahead of market-open today, Tuesday the 9th of August.
 

Upstart Tanks Post Q2 Results 😭

Shares of fintech company Upstart (UPST), are trading 13% lower in pre-market trading at the time of writing. Upstart announced its Q2 results after market close on Monday and reported revenue of $228 million and adjusted earnings per share of $0.01. Comparatively, analysts forecast Upstart to report sales of $242 million and adjusted earnings of $0.10 per share in the June quarter.

In Q3, Upstart forecasts sales of $170 million, significantly lower than estimates of $249 million. We can see that its revenue and earnings miss in Q2, coupled with its less-than-impressive guidance, have driven shares of Upstart lower.

Upstart stated that its banking partners originated 321,138 loans totaling $3.3 billion in the second quarter, an increase of 12% year-over-year. However, its conversion on rate requests fell to 13% from 22% in the year-ago period.

Upstart attributed its tepid quarterly results to “a difficult macroeconomic environment that led to funding constraints in our marketplace.” A period of rising interest rates will weigh heavily on the lending industry in the near term, which is highly cyclical.

Upstart was one of the top-performing stocks in 2021. The company went public in December 2020, and its IPO was priced at $20 per share. Upstart stock touched a record high of $390 in October 2021 and is currently down over 90% from all-time highs.
 

A Sweet Report from Lemonade 🍋

Lemonade is soaring in pre-market trading this morning after last night’s earnings report. The insurtech specialist posted guidance that pleased investors, which now encapsulates revenue from the recent Metromile acquisition. Aside from guidance, management has also committed to reducing its spending, stating: “We’ve moderated our growth spend and hiring pace, and expect our existing capital to suffice until we’re profitable.” For a company that has been deeply unprofitable since its IPO, this change in tact will be welcome in the current macro environment.

Numbers-wise, Lemonade is still delivering growth across all its key metrics. In-force premium — the total amount of premiums it has under contract — was up 54% year-over-year to $458 million, premium-per-customer was up 18% to $290, total customers are up 31% to 1.58 million, and gross earned premium — premiums taken in this quarter — was up 60% to $107 million. Revenue was also up 77% to $50 million.

However, while the company is growing, it is still posting big losses, with a net loss of $68 million and an adjusted EBITDA loss of $50 million. Thankfully the company is well-capitalized with $1 billion in cash and cash equivalents on the books. It may be taking steps to rein in its spending, but investors should be wary that the company is still burning significant cash every quarter. For those considering a potential investment, realise that Lemonade is a high-risk stock.
 

Palantir Stumbles Following Sub-Par Earnings 🔎

Shares in deep data analysis company Palantir have slid by over 14% following a worse-than-expected earnings report yesterday morning. The American software company managed to beat expectations for revenue, but stumbled when it came to its earnings per share (EPS).

Palantir announced quarterly revenue of $473 million with a loss per share of $0.01. Analysts had been expecting figures of $471.3 million and earnings of $0.03 per share respectively. Company CFO David Glazer attributed the earnings miss to a decline in marketable securities and investments as opposed to anything majorly wrong with the core aspects of the firm. In fact, Palantir managed to increase its revenue by 26% year-over-year, while growing its commercial customer number by 250% against the year-ago quarter.

Palantir specializes in deep data analyses — using small scraps of information to crawl vast swathes of available databases to glean information from seemingly nowhere. In the past, the company has been used to help locate Osama bin Laden in 2011, to trace COVID-19 infections, and even predict infectious outbreaks in pandemic hot zones.

The company has three main products — one that primarily serves counter-terrorism agencies in the U.S. government, one used mainly by commercial clients, and then a third that acts as a management system for the other tools.

Palantir is a highly secretive company that has garnered some considerable controversy due to its advocacy of even greater surveillance. It’s currently down 47% year-to-date as a result of the rotation away from tech stocks en masse, but appears to be in a favorable position due to the many strong contracts it holds with clandestine agencies and government organizations.

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