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Upstart (NASDAQ:UPST) said Tuesday it will lay off ~20% of its headcount (~365 employees) and halt development of its small-business loan product as the firm aims to return to profitability amid a challenging macroeconomic backdrop.
The consumer lending platform expects to incur ~$15M in total charges related to the job cuts and ~$3M of one-time non-cash savings. Most of the charges and cash expenditures related to the reorganization will be incurred or completed in Q1.
Upstart (UPST) also plans to suspend development of its small business loan product till macro conditions improve.
“The announcement highlights a refocusing on core business lines to recover from aggressive growth in a risky environment,” said Jefferies analyst John Hecht. “We agree with measures intended to cut costs, preserve liquidity, and protect the balance sheet.”
Once the reorganization is fully implemented, Upstart (UPST) expects to realize cash savings of ~$57M in operating expenses over the next 12 months. It expects additional non-cash savings of ~$42M related to stock-based compensation through 2025.
Shares of Upstart (UPST) -2.2% in afternoon trade.
Earlier, Upstart (UPST) stock climbed over 10% as short sellers covered their positions.
