Shares of Upstart (NASDAQ: UPST) stock lost 32% of their value in December, according to data provided by S&P Global Market Intelligence. The one-time market darling continues to drastically fall as sales growth slows, profits turn to losses, and the general market atmosphere is hostile to risky tech stocks.

Upstart stock was explosive in 2021 as it posted astronomical growth, including one quarter of four-digit revenue growth. Investors were taken by its disruptive model that uses artificial intelligence to determine credit quality. According to Upstart, that has resulted in fewer defaults at the same approval rates, which is a plus for lenders, and more approvals at the same risk rates, a plus for borrowers.

However, its thesis seems to have crashed as the economy falters and interest rates rise. In this kind of environment, borrowers are more reluctant to approve loans as the risk of defaults increases. Upstart's own platform decreases as a benefit since with higher rates the real risk increases, making it harder for the platform to spot loans for approval. As borrowers use it less, the fees Upstart gets are declining as well.

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Source Fool.com