Credit giant Upstart has laid off about 140 employees — or 7% of its total workforce — who help process loan applications, sources told londonbusinessblog.com.
The cloud-based AI lending platform notified affected employees of the layoff on Tuesday. Upstart had about 2,000 employees, according to the company, confirming the layoffs.
“Given the challenging economy, we are making this difficult decision for the long-term health of the business. We do not anticipate any further layoffs and will continue to hire people for positions of strategic importance to our business,” Upstart spokesman Mike Nelson said in a statement.
Upstart said in his last 8K Archiving with the U.S. Securities and Exchange Commission that the decision was the result of ongoing economic challenges and the “reduction in loan volume” on its platform. However, the company would not confirm the exact decline in credit volumes.
in his last quarterly results in August, the California-based company reported a 72% annual increase in credit 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. Third quarter results are expected on November 8.
Upstart is facing difficulties due to declining demand for loans in the US due to significant rate hikes by the US Federal Reserve to counter the global rise in inflation. The share price has fallen 84% this year. Upstart traded at $22.88 in afternoon trading on Tuesday.
Upstart’s market cap rose to nearly $32 billion at one point after its public debut in November 2020. Since then, the company’s total share value fell to less than $2 billion earlier on Tuesday.
Adverse economic conditions have impacted not only the lending industry but also many technology companies around the world. Telehealth unicorn Cerebral, online real estate marketplace Zillow and SurveyMonkey mom Momentive Global have all laid off employees in recent weeks. Companies like Netflix, Spotify and Tencent also made similar decisions. Indian startups such as Byju’s and Ola have also laid off their employees amid the dip in funding and investment.