Lending giant Upstart has laid off about 140 employees — or 7% of its total workforce — who help process loan applications, sources told TechCrunch.
The cloud-based AI lending platform notified its affected employees about the layoff on Tuesday. Upstart had about 2,000 employees, according to the company, which confirmed the layoffs.
"Given the challenging economy, we are making this difficult decision for the long-term health of the company. We do not expect any further layoffs, and continue to hire for roles that are strategic to our business," Upstart spokesperson Mike Nelson said in a statement.
Upstart said in its latest 8-K filing with the U.S. Securities and Exchange Commission that the decision was due to ongoing economic challenges and the "reduction in the volume of loans" on its platform. However, the company would not confirm the exact drop in its loan volumes.
In its last quarterly results in August, the California-based company reported a 72% annual increase in loan volumes on its platform from 456,610 in the first half of 2021 to a total of 786,675 in the same period a year later. The earnings for the third quarter are due on November 8.
Upstart is facing difficulties owing to weakening demand for loans in the U.S. due to significant hikes in interest rates by the U.S. Federal Reserve to cope with the global rise in inflation. The company's share price dropped by 84% this year. Upstart was trading at $22.88 in afternoon trading on Tuesday.
The market cap of Upstart rose to nearly $32 billion at one point after its public debut in November 2020. Since, the company's total stock value dipped to less than $2 billion earlier on Tuesday.
Unfavorable economic conditions have not only impacted the lending industry but also many technology companies around the globe. Telehealth unicorn Cerebral, online real estate marketplace Zillow and SurveyMonkey parent Momentive Global have all laid off employees in recent weeks. Companies including Netflix, Spotify and Tencent also made similar decisions. Indian startups such as Byju's and Ola have also sacked their employees amid the dip in funding and investments.