NEW YORK, June 23, 2022 (GLOBE NEWSWIRE) — Pomerantz LLP announces that a class action lawsuit has been filed against Upstart Holdings, Inc. (“Upstart” or the “Company”) (NASDAQ: UPST) and certain of its officers. The class action, filed in the United States District Court for the Northern District of California and registered as 22-cv-03668, is on behalf of a class consisting of all persons and entities other than defendants who purchased or otherwise acquired Upstart securities between March 18, 2021 and May 9, 2022, inclusive (the “Class Action Period”) against Upstart and certain of its officers (collectively the “Defendants”) seeking to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.
If you are a shareholder who purchased or otherwise acquired Upstart securities during the class period, you have until July 12, 2022 to ask the court to appoint you as the lead plaintiff in the class. A copy of the complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those making inquiries by e-mail are encouraged to include their mailing address, phone number and number of shares purchased.
[Click here for information about joining the class action]
Upstart is a fintech company that uses artificial intelligence (“AI”) and data science to underwrite consumer credit. The Company partners with banks to offer credit to consumers, either through the Upstart website or through banking partner websites integrated with Upstart technology. Upstart says its underwriting process allows banking partners to issue credit with higher approval rates, lower loss rates, and a high degree of automation.
The complaint alleges that throughout the class action period, the defendants claimed that the lack of loans the company kept on its balance sheet ensured that it was exposed to only limited credit risk. In fact, as investors learned after markets closed on May 9, 2022, the company’s much-vaunted AI underwriting model was unable to properly assess credit risk under conditions changing macroeconomics. As a result, Upstart had increasingly taken on increasingly less creditworthy loans throughout the Class Period.
Investors learned the truth during the company’s first quarter 2022 earnings call with analysts when Upstart admitted that the loans the company had been forced to keep on its balance sheet had more than doubled in a single quarter. Specifically, Chief Financial Officer Sanjay Datta (“Datta”) reported that “the quarter-end loan, note and residual balance was . . . up to $604 million from $261 million at the end of the quarter. fourth quarter. Datta attributed the increase in loans on the company’s balance sheet to “rising interest rates and increased consumer delinquencies which are putting downward pressure on conversion.” Datta acknowledged that ” historically, [the Company’s] balance was almost exclusively for R&D purposes,” but in the first quarter of 2022, the Company used the balance “to make . . . a kind of market clearing mechanism. He further stated that Upstart had “begun to selectively use [its] capital as a funding buffer for basic personal loans in times of fluctuating interest rates where the market clearing price is constantly changing.
In a report on the company’s earnings, an analyst dismissed the company’s alleged “market repair” rationale and explained that the increase in loans on the company’s balance sheet represented a “divergence” from the ” small capitalization business model” of the company, which indicated that the company had “few alternatives other than to hold more loans due to funding problems. In response to this disclosure, Upstart’s common stock price cratered 56% the next trading day, from a closing price of $77.13 on May 9, 2022 to a closing price of 33.61. $ on May 10, 2022.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, Paris and Tel Aviv, is recognized as one of the leading firms in the areas of corporate litigation, securities and antitrust. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues the tradition he established, fighting for the rights of victims of securities fraud, breaches of fiduciary duty and corporate misconduct. The firm recovered numerous multimillion-dollar damages on behalf of class members. See www.pomlaw.com.
Robert S. Willoughby
888-476-6529 ext. 7980