Upstart Holdings
UPST
$28.86
-5.69%
Upstart Holdings, Inc. is a financial services company that operates a proprietary, cloud-based, artificial intelligence lending platform, connecting consumer loan demand with a network of AI-enabled bank partners across personal, auto, and other lending products. As a pioneer in AI-driven credit underwriting, Upstart differentiates itself by using machine learning to assess creditworthiness beyond traditional FICO scores, positioning itself as a disruptor in the consumer credit industry. The current investor narrative centers on the company's rapid revenue growth and expansion into auto and mortgage lending, which validates its AI model and opens larger market opportunities, but is tempered by concerns over profitability, rising interest rates, and the potential risks of its planned transition to becoming a bank. Recent headlines highlight both bullish predictions of the stock doubling by 2027 and bearish reactions to Q1 earnings, which revealed a disconnect between strong revenue growth and deteriorating profitability.…
UPST
Upstart Holdings
$28.86
Related headlines
Investment Opinion: Should I buy UPST Today?
Rating: Hold. The consensus is Buy with an average target of $40.60, implying 33.4% upside, but the recent earnings miss and profitability reversal warrant caution. The thesis is that Upstart's AI-driven platform has strong growth potential, but near-term profitability challenges and high volatility make it a speculative hold. Supporting evidence includes revenue growth of 39.85% YoY, a forward PE of 9.29x (though trailing PE is 78.09x), a PS ratio of 3.90x below historical averages, and a gross margin of 98.1%. However, the negative operating margin and cash burn are red flags. The rating would upgrade to Buy if the company returns to profitability and maintains revenue growth above 30%, or downgrade to Sell if revenue growth decelerates below 20% or cash burn worsens. Overall, the stock is fairly valued relative to its growth potential, but the high risk justifies a Hold for most investors.
Sign up to view all
UPST 12-Month Price Forecast
The AI assessment is neutral with medium confidence. Upstart's revenue growth is impressive, but the lack of profitability and high volatility create significant uncertainty. The forward PE of 9.29x implies the market expects a massive earnings recovery, which is not yet visible in the financials. If the company can achieve operating leverage and sustain growth, the stock could re-rate higher; however, if losses persist, the valuation could compress further. I would upgrade to bullish if the company reports two consecutive profitable quarters with revenue growth above 30%, and downgrade to bearish if cash burn accelerates or revenue growth falls below 20%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Upstart Holdings's 12-month outlook, with a consensus price target around $40.60 and implied upside of +40.7% versus the current price.
Average Target
$40.60
0 analysts
Implied Upside
+40.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$20 - $61
Analyst target range
Upstart is covered by 15 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 2.13 (where 1 is Strong Buy and 5 is Sell). The average target price is $40.60, implying an upside of 33.4% from the current price of $30.43. The target price range spans from a low of $20.00 to a high of $61.00, indicating a wide dispersion in analyst expectations. The high target of $61.00 suggests a potential for a 100% upside, likely assuming a successful expansion into auto lending and a return to profitability, while the low target of $20.00 reflects concerns about rising interest rates and competitive pressures. Recent ratings from firms like Goldman Sachs (Neutral) and BTIG (Buy) show a mix of caution and optimism, with no major downgrades or upgrades in the last few months.
Bulls vs Bears: UPST Investment Factors
Upstart presents a classic high-risk, high-reward scenario. The bull case rests on accelerating revenue growth (39.85% YoY), a 98.1% gross margin, and a consensus Buy rating with 33.4% upside to the average target. However, the bear case is equally compelling: profitability reversed to a net loss in Q1 2026, operating margin turned negative, and the stock has been in a steep downtrend with a beta of 2.165. The most critical tension is whether the company can convert its impressive top-line growth into sustainable profitability. If it can control costs and achieve operating leverage, the stock could re-rate significantly; if not, the high valuation and cash burn could lead to further downside. Currently, the bearish evidence on profitability and volatility slightly outweighs the bullish growth narrative, but the potential for a turnaround makes it a speculative buy for risk-tolerant investors.
Bullish
- Revenue Growth Accelerating: Q1 2026 revenue of $308.2M grew 39.85% YoY, up from $220.4M in Q1 2025 and $226.4M in Q4 2024, showing clear acceleration. This validates the AI lending platform's expanding market reach.
- High Gross Margin: Gross margin of 98.1% in Q1 2026 (and 95.2% TTM) reflects the asset-light, software-like model. This provides significant operating leverage potential as revenue scales.
- Analyst Consensus Buy: 15 analysts rate UPST a Buy with a mean score of 2.13 (1=Strong Buy). Average target of $40.60 implies 33.4% upside from $30.43, with high target of $61.00 suggesting 100% potential.
- Institutional Confidence: Hidden Lake purchased 316,000 shares worth $13.8M in February 2026, signaling institutional conviction in the AI lending disruption despite the stock's decline.
Bearish
- Profitability Reversal: Q1 2026 net loss of -$6.6M reversed the profitable Q3 and Q4 2025 (net income of $31.8M and $18.6M). Operating margin turned negative at -2.4%, driven by a surge in sales and marketing expenses to $104.5M.
- High Valuation on Trailing PE: Trailing PE of 78.09x is steep, though forward PE of 9.29x suggests market expects massive earnings growth. The negative PEG ratio of -0.56 indicates growth expectations are negative, making valuation hard to justify.
- High Volatility and Downtrend: Beta of 2.165 means the stock is more than twice as volatile as the market. The 1-year price change of -52.33% vastly underperforms the S&P 500's +20.37%, and the stock sits 60.5% below its 52-week high.
- Interest Rate Sensitivity: Rising interest rates compress loan volumes and increase credit risk, directly impacting Upstart's business model. The planned transition to becoming a bank introduces additional interest rate and regulatory risks.
UPST Technical Analysis
Upstart's stock is in a pronounced downtrend, with a 1-year price change of -52.33%, significantly underperforming the S&P 500's +20.37% gain over the same period. The current price of $30.43 sits at approximately 12.4% above the 52-week low of $23.965 and 60.5% below the 52-week high of $76.95, indicating the stock is trading near the lower end of its range, suggesting a value opportunity or a falling knife depending on one's perspective. The stock's beta of 2.165 indicates it is more than twice as volatile as the market, amplifying both downside and upside moves.
Beta
2.17
2.17x market volatility
Max Drawdown
-71.2%
Largest decline past year
52-Week Range
$24-$77
Price range past year
Annual Return
-54.8%
Cumulative gain past year
| Period | UPST Return | S&P 500 |
|---|---|---|
| 1m | -1.4% | +1.9% |
| 3m | +1.1% | +2.3% |
| 6m | -1.5% | +10.6% |
| 1y | -54.8% | +19.5% |
| ytd | -37.0% | +11.8% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
UPST Fundamental Analysis
Upstart's revenue has shown strong growth, with Q1 2026 revenue of $308.2 million, up 39.85% year-over-year, and a clear acceleration from $220.4 million in Q1 2025 and $226.4 million in Q4 2024. However, the company reported a net loss of -$6.6 million in Q1 2026, a sharp reversal from the profitable quarters in Q3 and Q4 2025, which had net incomes of $31.8 million and $18.6 million, respectively. Gross margin remains exceptionally high at 98.1% in Q1 2026, but operating margin turned negative at -2.4%, reflecting increased operating expenses, particularly in sales and marketing, which rose to $104.5 million in Q1 2026 from $58.97 million in Q1 2025.
Quarterly Revenue
$308214000.0B
2026-03
Revenue YoY Growth
+39.9%
YoY Comparison
Gross Margin
98.1%
Latest Quarter
Free Cash Flow
$-286776000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is UPST Overvalued?
Given that Upstart's trailing twelve-month net income is positive (EPS of $0.013), the PE ratio is the primary valuation metric, with a trailing PE of 78.09x and a forward PE of 9.29x, indicating the market expects significant earnings growth. The stock's PS ratio of 3.90x is below the historical average, and its EV/Sales of 3.59x suggests a discount to its own past multiples. Compared to the industry average, Upstart's forward PE of 9.29x is at a premium to the sector, but the PEG ratio of -0.56 is negative due to negative earnings growth expectations, making the valuation difficult to justify on a growth-adjusted basis.
PE
78.1x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 38x~275x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
68.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are substantial. The company's net loss of -$6.6M in Q1 2026, after two profitable quarters, highlights earnings volatility. Operating margin turned negative at -2.4%, driven by a 77% YoY increase in sales and marketing expenses to $104.5M. The TTM free cash flow is -$286.8M, indicating cash burn. With a debt-to-equity ratio of 2.32, the company has significant leverage, which could strain liquidity if interest rates rise further. Revenue concentration in personal lending remains high, though auto and mortgage expansion is underway. The high gross margin of 98.1% provides some cushion, but the negative operating margin shows that fixed costs are not yet covered by revenue scale.
FAQ
The key risks are: 1) Financial risk: The company has negative free cash flow of -$286.8M TTM and a net loss in Q1 2026, indicating potential cash burn. 2) Market risk: High beta of 2.165 means the stock is sensitive to market swings, and the 1-year decline of -52.33% shows significant downside. 3) Competitive risk: Established banks are building their own AI tools, which could erode Upstart's competitive advantage. 4) Regulatory risk: The planned transition to becoming a bank introduces new regulatory and interest rate risks. The most severe risk is a combination of rising interest rates and competitive pressure, which could lead to sustained losses and a further decline in the stock price.
The 12-month forecast is uncertain. The bull case (25% probability) targets $50-$61, driven by successful expansion and profitability. The base case (50% probability) targets $35-$45, aligning with the analyst average of $40.60. The bear case (25% probability) targets $20-$25, reflecting continued losses and interest rate headwinds. The most likely scenario is the base case, assuming revenue growth continues but profitability remains inconsistent. Investors should monitor quarterly earnings for signs of a return to profitability, which would increase the probability of the bull case.
UPST's valuation is mixed. The trailing PE of 78.09x is high, but the forward PE of 9.29x suggests the market expects significant earnings growth. The PS ratio of 3.90x is below its historical average, indicating a potential discount. Compared to the industry, the forward PE is at a premium, but the negative PEG ratio of -0.56 makes growth-adjusted valuation unattractive. Overall, the stock appears fairly valued relative to its growth potential, but the high trailing PE and negative earnings growth expectations introduce risk. The market is pricing in a strong recovery, which may or may not materialize.
UPST is a speculative buy for risk-tolerant investors. The analyst consensus is Buy with an average target of $40.60, implying 33.4% upside from the current price of $30.43. However, the stock is highly volatile (beta 2.165) and has underperformed the market significantly over the past year. The biggest downside risk is continued profitability issues, as seen in Q1 2026's net loss of -$6.6M. For investors with a high risk appetite and a long-term horizon, it could be a good buy if they believe in the AI lending story. For conservative investors, it is not a good buy due to the high uncertainty and potential for further losses.
UPST is more suitable for long-term investment, but with high risk. The company is in a growth phase with significant potential, but its earnings are volatile and the stock is highly volatile (beta 2.165). Short-term trading is risky due to the stock's sensitivity to interest rates and earnings news. For long-term investors, a minimum holding period of 3-5 years is recommended to allow the AI lending platform to mature and achieve profitability. However, investors must be prepared for significant drawdowns, as the stock has already fallen 71% from its peak. The lack of dividends and negative free cash flow mean the investment relies solely on capital appreciation, which is uncertain.