May 10 (Reuters) - Shares of Upstart Holdings tanked 60% on Tuesday after the artificial intelligence-driven lending platform cut its full-year revenue outlook, signaling a drop in demand for loans as interest rates rise.

The fintech company's stock was on track to erase most of its gains since going public in December 2020, becoming the latest pandemic darling to face the brunt of high inflation and fears of an economic slowdown.

Growth concerns fueled by the Russia-Ukraine war as well as aggressive monetary policy tightening to combat inflation have pushed up the average loan pricing on Upstart's platform by more than 300 basis points since October, the company said on its conference call.

Upstart, which makes most of its money from fees paid by banks using its platform, lowered its annual revenue target to $1.25 billion from $1.40 billion earlier as it expects loan volumes to take a hit this year.

Buy now, pay later lender Affirm also slumped 15% on Tuesday as Upstart's results triggered concerns about the health of the broader consumer lending environment. Affirm is slated to report third-quarter results on Thursday.

"If companies are not profitable and are not generating cash flow in a rising rate environment and a draining liquidity environment, many investors can't justify owning them," said Thomas Hayes, chairman at Great Hill Capital in New York. (Reporting by Medha Singh and Anisha Sircar in Bengaluru; Editing by Devika Syamnath)