Upstart UPST Stock Drops Amid Regulatory Scrutiny and Slowing Loan Volumes

Upstart Holdings (UPST) shares fell sharply on January 21, 2026, after the company reported declining loan volumes and disclosed an ongoing regulatory inquiry into its AI-driven lending practices. The decline follows a 40% quarterly drop in funded loans, which fell to $750 million in Q4 2025 from $1.25 billion the prior year. Upstart attributed the slump to tighter credit conditions and reduced consumer demand. The California-based fintech confirmed it received a subpoena from the Consumer Financial Protection Bureau (CFPB) in December 2025 seeking documents related to its underwriting algorithms and compliance with fair lending laws. Analysts warn the investigation could lead to stricter operational constraints. "Regulatory headwinds threaten Upstart’s core business model," said one financial analyst at Wedbush. The stock closed down 18% at $32.40 on the Nasdaq, marking its lowest level since October 2023.