Upstart Holdings
UPST
$23.56
-4.81%
Upstart Holdings operates a proprietary, cloud-based artificial intelligence lending marketplace that aggregates consumer loan demand and connects it to a network of AI-enabled bank and credit union partners, spanning Personal Lending (unsecured and small-dollar loans), Auto Lending (refinance, retail, and secured personal loans), and Other products including HELOCs. The company positions itself as a technology disruptor in the Financial Services sector, monetizing its AI underwriting models through origination fees, servicing fees, and increasingly through holding loans on its own balance sheet rather than acting as a pure marketplace. The current investor debate centers on whether Upstart's rapid revenue reacceleration — Q2 2026 revenue grew 42.3% year-over-year to $377 million — can translate into durable profitability, given that the company swung to a modest net loss in Q1 2026 before recovering in Q2, and that free cash flow remains deeply negative. Sentiment is further complicated by the company's push into auto and mortgage lending as a path to a vastly larger addressable market, balanced against persistent interest-rate sensitivity, a plan to become a bank that introduces new regulatory and balance-sheet risk, and competitive pressure from established lenders building their own AI underwriting tools.…
UPST
Upstart Holdings
$23.56
Related headlines
Investment Opinion: Should I buy UPST Today?
Rating: Hold. The core thesis is that Upstart's revenue reacceleration (+42.3% YoY) and deep value on forward earnings (6.6x PE) are offset by negative free cash flow (-$296.7 million TTM), volatile profitability, and a severe downtrend that shows no signs of bottoming. The analyst consensus is Buy with a mean rating of 2.19 and an average target of $38.375, implying 62.9% upside, but the wide target range ($18-$61) and lack of recent upgrades signal low conviction.
Supporting evidence: revenue grew 42.3% YoY to $377.2 million in Q2 2026, gross margin is 96.7%, and the PS ratio of 3.90x is at a multi-year low. However, net margin is only 5.0%, operating margin 5.1%, and free cash flow is deeply negative. The forward PE of 6.59x is attractive only if the consensus EPS of $5.85 is achieved, which would require a dramatic profitability inflection from the current $0.17 quarterly EPS.
Risks: the biggest risks are continued cash burn, interest-rate sensitivity, and competitive erosion. The rating would upgrade to Buy if free cash flow turns positive or if the stock reclaims the $25-$26 consolidation shelf with improving relative strength. It would downgrade to Sell if revenue growth decelerates below 20% or if the 52-week low of $22.21 breaks decisively. Valuation verdict: the stock appears undervalued relative to its own history on PS and forward PE, but the market is pricing in significant fundamental deterioration, so it is fairly valued until cash flow improves.
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UPST 12-Month Price Forecast
The risk/reward is balanced but uncertain. On one hand, the stock is deeply undervalued on forward earnings and revenue multiples relative to its history, and the analyst consensus points to significant upside. On the other hand, the company is burning cash, profitability is fragile, and the technical trend is decisively negative. We would upgrade to bullish if free cash flow turns positive or if the stock establishes a base above $26 with improving relative strength. We would downgrade to bearish if the 52-week low of $22.21 breaks or if revenue growth decelerates 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 $38.38 and implied upside of +62.9% versus the current price.
Average Target
$38.38
0 analysts
Implied Upside
+62.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$18 - $61
Analyst target range
Coverage is robust with 16 analysts, and the consensus recommendation is Buy with a mean rating of 2.19 on a scale where lower is more bullish. The average target price of $38.375 implies +62.9% upside from the current $23.56, a strikingly wide gap that reflects either significant undervaluation or stale targets that have not yet been marked down to the new price reality. The distribution leans bullish — recent actions from BTIG (Buy, reiterated September 22), Piper Sandler (Overweight), Needham (Buy), and Citigroup (Buy) dominate, with Goldman Sachs the notable Neutral holdout — but the absence of any recent upgrades and the Zacks note citing analyst estimate cuts and a Sell rating suggest the bullish consensus is under pressure.\n\nThe target range of $18.00 to $61.00 is extraordinarily wide — a 3.4x spread from low to high — signaling deep disagreement about the company's trajectory. The $61 high target implies roughly 159% upside and would require the forward EPS estimate of ~$5.85 to be achieved with multiple expansion toward 10x forward earnings, plus successful scaling of auto and HELOC lending and a favorable interest-rate backdrop. The $18 low target, 23.6% below the current price, prices in margin compression, continued cash burn, and competitive erosion as established lenders replicate AI underwriting. With the stock trading near its 52-week low and the average target 63% above spot, the consensus is directionally bullish but the wide dispersion and lack of fresh upgrades indicate low conviction — a setup where the stock could remain volatile and where target revisions, rather than the targets themselves, will be the more important signal to watch.
Bulls vs Bears: UPST Investment Factors
The bear case currently has stronger evidence: the stock is in a relentless downtrend (-50.7% over one year, -66.6% max drawdown), free cash flow is deeply negative (-$296.7 million TTM), and profitability oscillates around breakeven despite a 96.7% gross margin. The bull case rests on genuine revenue reacceleration (+42.3% YoY) and a forward PE of 6.6x that implies an extraordinary earnings inflection, supported by a 63% analyst target upside. The single most important tension is whether the forward EPS estimate of ~$5.85 is achievable; if it is, the stock is deeply undervalued, but if estimates are cut further, the current price could be justified. Near-term momentum and negative relative strength suggest caution until a bottoming process emerges.
Bullish
- Revenue reaccelerating at 42% YoY: Q2 2026 revenue of $377.2 million grew 42.3% year-over-year and rose sequentially from $318.6 million in Q1 and $304.2 million in Q4 2025, confirming a rising trajectory. The $59 million sequential step-up is real and supports the thesis that Upstart's AI lending marketplace is scaling again.
- Forward PE of 6.6x implies deep value: At $23.56, the stock trades at just 6.59x consensus FY EPS of ~$5.85, versus a trailing PE of 78.1x. If the earnings recovery materializes, the valuation is extremely compressed relative to its historical trailing PE range of 38x to 275x during profitable quarters.
- Analyst consensus Buy with 63% upside: 16 analysts rate the stock a Buy (mean 2.19) with an average target of $38.375, implying +62.9% upside from $23.56. Recent actions from BTIG, Piper Sandler, Needham, and Citigroup remain bullish, and the $61 high target implies ~159% upside.
- PS ratio at multi-year low: The PS ratio has compressed from 9.07x in Q2 2026 and 14.03x in Q4 2025 to 3.90x today, below even the 2022 trough of 7.4x and far below the mid-teens median. This suggests the market has already priced in significant pessimism.
Bearish
- Deeply negative free cash flow: TTM free cash flow is -$296.7 million, with Q2 2026 alone burning $134.4 million on operating cash flow of -$136.6 million. The negative FCF yield (P/FCF of -28.4x) shows growth is funded by balance-sheet capacity and external financing, not internal cash generation.
- Profitability oscillates around breakeven: Despite a 96.7% gross margin, Q2 2026 net income of $16.5 million followed a Q1 2026 net loss of $6.6 million, and the 5.1% operating margin shows $347.6 million of operating expenses consuming gross profit. The six-quarter pattern (-$2.8M, -$6.8M, -$2.4M, +$5.6M, +$31.8M, +$18.6M, -$6.6M, +$16.5M) is one of oscillation, not a clean march to profitability.
- High leverage and weak returns: Debt-to-equity stands at 2.32x and total debt to capitalization at 71.8%, while ROE is just 6.7% and ROA 2.0%. The 5.26x price-to-book versus a 6.7% ROE implies the market is paying a premium for sub-cost-of-equity returns.
- Severe downtrend and falling knife: The stock is down 50.7% over the past year and 48.6% YTD, sitting just 4.1% above its 52-week low of $22.21 with a -66.62% maximum drawdown. Relative strength versus SPY is -66.2 percentage points over one year, with no evidence of a durable bottoming process.
UPST Technical Analysis
Upstart is locked in a sustained, punishing downtrend: the stock is down 50.7% over the past year and 48.6% year-to-date, and at $23.56 it sits just 4.1% above its 52-week low of $22.21 while trading only 42.7% of the way up from that low toward the 52-week high of $55.22. That positioning near the bottom of the range is characteristic of a falling knife rather than a value opportunity, and the -66.62% maximum drawdown confirms the severity of the de-rating. With the 1-year relative strength versus SPY at -66.2 percentage points, there is no evidence of a durable bottoming process yet.\n\nShort-term momentum is weak and, critically, diverging negatively from an already negative longer-term trend. The stock is down 5.2% over the past month, 20.2% over three months, and 31.8% over six months, meaning the decline is not decelerating but compounding — each successive window shows deterioration rather than stabilization. Relative strength is negative across every horizon (-6.4 points vs. SPY over one month, -22.9 over three months, -39.3 over six months), and the most recent session saw a -4.8% single-day drop on 4.27 million shares, suggesting distribution rather than accumulation. The 1-month decline of 5.2% against SPY's +1.2% gain underscores that this is idiosyncratic weakness, not a market-wide risk-off move.\n\nKey technical levels are stark: the 52-week low of $22.21 is the only meaningful support, and the stock has tested the $22.74-$23.03 zone repeatedly in late September and early October, with a brief bounce to $24.75 on October 15 failing to hold. A decisive breakdown below $22.21 would open fresh downside with no historical reference point, while a reclaim of the $25-$26 area (the September consolidation shelf) would be the first sign of a tradable base; the 52-week high of $55.22 is so distant it is irrelevant as near-term resistance. Beta of 2.429 means the stock is roughly 143% more volatile than the market, so position sizing must account for swings roughly 2.4x the S&P 500's — a 10% market move implies a ~24% move here, and the 6.55 short ratio signals a heavily shorted float that could amplify either direction.
Beta
2.43
2.43x market volatility
Max Drawdown
-66.6%
Largest decline past year
52-Week Range
$22-$55
Price range past year
Annual Return
-50.7%
Cumulative gain past year
| Period | UPST Return | S&P 500 |
|---|---|---|
| 1m | -5.2% | +0.2% |
| 3m | -20.2% | +2.9% |
| 6m | -31.8% | +8.4% |
| 1y | -50.7% | +14.9% |
| ytd | -48.6% | +11.9% |
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UPST Fundamental Analysis
Revenue is genuinely reaccelerating: Q2 2026 revenue of $377.2 million grew 42.3% year-over-year versus $265.1 million in Q2 2025, and the sequential progression from $318.6 million in Q1 2026 and $304.2 million in Q4 2025 confirms a rising trajectory. The year-over-year comparison is flattered by a weak 2025 base, but the absolute dollar step-up of roughly $59 million sequentially is real. Within the disclosed fee lines, servicing fees net of $54.8 million and gross servicing fees of $33.6 million are meaningful recurring revenue streams, while borrower fees of $9.3 million and collection agency fees of $3.5 million remain small contributors — the core economics still depend on loan origination volume and the take rate on the marketplace.\n\nProfitability is thin and volatile despite spectacular gross margins. Q2 2026 net income was $16.5 million on a 96.7% gross margin, but that followed a Q1 2026 net loss of $6.6 million, and the operating margin of just 5.1% (operating income of $17.2 million) shows how quickly $347.6 million of operating expenses — including $114.5 million of sales and marketing and $141.7 million of G&A — consume gross profit. The pattern over the last six quarters (net income of -$2.8M, -$6.8M, -$2.4M, +$5.6M, +$31.8M, +$18.6M, -$6.6M, +$16.5M) is one of oscillation around breakeven rather than a clean march to profitability, and the 5.0% net margin is far below what a 96.7% gross-margin business should eventually deliver if scale economics materialize.\n\nThe balance sheet carries real risk. Debt-to-equity stands at 2.32x, total debt to capitalization is 71.8%, and free cash flow TTM is -$296.7 million, with Q2 2026 alone burning $134.4 million of FCF on operating cash flow of -$136.6 million. Liquidity is a genuine strength — current ratio of 2.99, cash of $982.3 million at period end, and a cash ratio of 6.55 — but ROE of just 6.7% and ROA of 2.0% mean the company is not earning an adequate return on the capital it deploys, and the negative FCF yield (P/FCF of -28.4x) indicates the growth is being funded by balance-sheet capacity and external financing rather than internal cash generation.
Quarterly Revenue
$377239000.0B
2026-06
Revenue YoY Growth
+42.3%
YoY Comparison
Gross Margin
96.7%
Latest Quarter
Free Cash Flow
$-296696000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is UPST Overvalued?
Because trailing net income is positive but negligible (EPS of $0.0128), the trailing PE of 78.1x is economically meaningless as a valuation anchor, so the more informative metric is the forward PE of 6.59x against consensus FY EPS estimates of roughly $5.85. That gap — 78x trailing versus 6.6x forward — implies the market expects an extraordinary earnings inflection, and the PEG ratio of -0.56 (negative because of the trailing earnings base) offers no useful cross-check. The EV/Sales of 3.12x and PS of 3.90x are the cleanest revenue-based anchors given the earnings volatility.\n\nOn revenue multiples, Upstart at 3.90x sales screens cheap relative to its own history but must be judged against a credit-services peer set where 3-5x sales is typical for lenders with similar growth. The premium is hard to quantify precisely because no explicit industry-average multiple was provided in the valuation data, but the internal evidence is telling: the stock's PS ratio has compressed from 9.07x in Q2 2026 and 14.03x in Q4 2025 to 3.90x today, a roughly 57% compression in two quarters driven by the 50%+ share-price decline rather than revenue deterioration. The 5.26x price-to-book versus a 6.7% ROE implies the market is paying a premium to book for sub-cost-of-equity returns, which is difficult to justify without a credible path to double-digit ROE.\n\nHistorically, Upstart's PS ratio has ranged from 7.4x (Q4 2022) to 132.9x (Q3 2021), with a median in the mid-teens; at 3.90x the stock is at the very bottom of its own multi-year band, below even the 2022 trough. Similarly, the forward PE of 6.6x compares with historical trailing PEs that ranged from 38x to 275x during profitable quarters. This places valuation near historical lows, which could signal either a genuine value opportunity if the earnings recovery materializes, or fundamental deterioration if the market is correctly discounting the sustainability of the 42% growth and the negative free cash flow.
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. Free cash flow TTM is -$296.7 million, with Q2 2026 burning $134.4 million, and the company relies on its $982.3 million cash balance and external financing to fund growth. Debt-to-equity of 2.32x and total debt to capitalization of 71.8% amplify balance-sheet risk, while ROE of 6.7% and ROA of 2.0% indicate capital is not being deployed efficiently. Profitability is volatile, with Q1 2026 net loss of $6.6 million followed by Q2 net income of $16.5 million, and operating margin of just 5.1% leaves little cushion if revenue growth slows.
Market and competitive risks are elevated. The stock's beta of 2.429 means it is roughly 143% more volatile than the market, so a 10% market move implies a ~24% move here. Valuation compression risk is real: the PS ratio has fallen from 14.03x in Q4 2025 to 3.90x today, and the forward PE of 6.6x could remain depressed if earnings estimates are cut. Competitive pressure is mounting as established lenders build their own AI underwriting tools, and Upstart's plan to become a bank introduces regulatory and balance-sheet risk. Recent news highlights analyst estimate cuts and a Sell rating, suggesting sentiment remains fragile.
Worst-case scenario: a recession or spike in interest rates would reduce loan demand, increase credit losses, and force Upstart to hold more loans on its balance sheet, further straining liquidity. The stock could retest its 52-week low of $22.21 (only 5.7% below current) and, if that breaks, the analyst low target of $18.00 implies a 23.6% decline from $23.56. A more severe scenario, such as a funding crisis or failed bank charter, could push the stock toward the 2022 trough levels, representing a 35-50% downside from current levels.
FAQ
The most severe risk is financial: negative free cash flow of -$296.7 million TTM and high leverage (debt-to-equity 2.32x) could force dilutive financing or balance-sheet stress. Competitive risk is also high, as established lenders build in-house AI underwriting tools, potentially eroding Upstart's edge. Macro risk is amplified by a beta of 2.429, meaning the stock is highly sensitive to interest rate changes and economic cycles. Company-specific risks include the execution of the bank charter plan and the scaling of auto and HELOC lending, both of which are unproven. Ranked by severity: financial, competitive, macro, and company-specific.
Our 12-month forecast has three scenarios: a bull case (25% probability) targeting $45-$61 if free cash flow turns positive and growth accelerates; a base case (50% probability) targeting $30-$38 if revenue growth moderates to ~25% and margins improve modestly; and a bear case (25% probability) targeting $18-$22 if a recession or rate spike hits loan demand. The base case is most likely, assuming the company continues to grow revenue but struggles to generate consistent positive cash flow. The key assumption is that interest rates remain stable and no major competitive or regulatory shocks occur.
UPST appears undervalued relative to its own history on most metrics. The PS ratio of 3.90x is below the 2022 trough of 7.4x and far below the mid-teens median, while the forward PE of 6.6x is a fraction of historical trailing PEs that ranged from 38x to 275x. However, the trailing PE of 78.1x and negative PEG ratio (-0.56) reflect the current earnings volatility. The market is pricing in significant skepticism about the sustainability of growth and profitability, so the valuation implies that investors expect either a major earnings inflection or continued deterioration. Relative to peers, the 3.9x sales multiple is within the typical 3-5x range for credit services, suggesting fair value if growth decelerates.
From a risk/reward perspective, UPST offers a compelling but highly uncertain opportunity. The stock trades at 6.6x forward earnings and 3.9x sales, with analyst targets implying 63% upside, but it also carries a beta of 2.429 and negative free cash flow of -$296.7 million. The biggest downside risk is a break below the 52-week low of $22.21, which could lead to further declines toward the $18 analyst low. For aggressive investors with a high tolerance for volatility and a long-term view, a small position could be justified, but conservative investors should wait for evidence of positive cash flow and a technical bottom.
UPST is more suitable for long-term investors who can tolerate significant volatility, given its high beta (2.429) and early-stage growth profile. The stock does not pay a dividend and has negative free cash flow, so it offers no income and relies on capital appreciation. Short-term trading is risky due to the strong downtrend and lack of technical support, but could be considered by experienced traders around key levels like the 52-week low. We suggest a minimum holding period of 2-3 years to allow the AI lending model and new product initiatives to mature and for cash flow to turn positive.