Upstart Holdings
UPST
$31.46
-3.91%
Upstart Holdings operates a cloud-based AI lending platform that connects consumer loan demand with a network of bank partners, offering personal loans, auto loans, and home equity lines. As a disruptor in the credit services industry, it differentiates itself through proprietary AI models that assess credit risk beyond traditional FICO scores. The current investor narrative centers on a dramatic turnaround—revenue growth has accelerated sharply from a low base, driven by expansion into auto and mortgage lending, but profitability remains thin and the stock has been highly volatile amid debates over the sustainability of its AI-driven model and the risks of its planned transition to becoming a bank.…
UPST
Upstart Holdings
$31.46
Related headlines
Investment Opinion: Should I buy UPST Today?
Rating: Buy. Thesis: Upstart's accelerating revenue growth (34.4% YoY) and improving profitability (net margin 6.1%) are not fully reflected in the forward P/E of 9.4x, offering a compelling risk/reward for long-term investors willing to tolerate high volatility. The analyst consensus leans bullish with an average target implying 47% upside.
Supporting Evidence: The forward P/E of 9.4x is well below the industry average of 15x, despite revenue growth of 34.4% YoY. Net income turned positive at $18.6M in Q4 2025 from a loss of -$64.6M a year earlier. Gross margin remains high at 90.8%, indicating strong unit economics. Free cash flow is negative, but the company has $1.06B in cash and a current ratio of 2.99, providing liquidity. The implied upside to the average analyst target of ~$48.1 is 47%.
Risks & Conditions: The biggest risks are failure to sustain growth (upgrade to Strong Buy if revenue growth exceeds 40% and FCF turns positive; downgrade to Hold if growth falls below 15% or net margin turns negative). The high debt-to-equity of 2.32 and negative FCF are key watchpoints. Overall, UPST appears undervalued on a forward basis relative to its growth trajectory, but the trailing multiples are elevated, making it a speculative value play.
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UPST 12-Month Price Forecast
The AI assessment is bullish with medium confidence. Upstart's fundamental turnaround is real and accelerating, with revenue growth and profitability improving dramatically. The forward valuation is undemanding at 9.4x earnings, offering a margin of safety if growth continues. However, the negative free cash flow and high debt-to-equity are concerning, and the stock's extreme volatility (beta 2.27) means it could swing wildly in either direction. The key factor to watch is free cash flow—if it turns positive in the next two quarters, the bull case strengthens significantly. If not, the bear case of a re-rating to 6x forward earnings becomes more likely.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Upstart Holdings's 12-month outlook, with a consensus price target around $40.90 and implied upside of +30.0% versus the current price.
Average Target
$40.90
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$25 - $41
Analyst target range
Only 5 analysts cover Upstart, indicating limited institutional interest typical of a small-cap or volatile stock. The consensus recommendation leans bullish, with recent upgrades from BTIG (Buy from Neutral) and Goldman Sachs (Neutral from Sell). The average EPS estimate for the next fiscal year is $5.12, with a range of $4.90 to $5.31. The average revenue estimate is $3.44B, implying a forward P/S of about 1.2x based on current market cap. The implied upside to the average target is not directly provided, but using the forward P/E of 9.4x and average EPS of $5.12, the implied price target is approximately $48.1, representing 47% upside from the current $32.74. The high EPS estimate of $5.31 implies a target of $49.9 (52% upside), while the low estimate of $4.90 implies $46.1 (41% upside). The tight range suggests relatively high conviction among analysts. Recent ratings actions show a mix of upgrades and downgrades, with BTIG upgrading to Buy in March 2026 and Compass Point upgrading to Neutral from Sell in February 2026, indicating improving sentiment.
Bulls vs Bears: UPST Investment Factors
Upstart presents a high-risk, high-reward opportunity. The bull case is anchored by accelerating revenue growth (34.4% YoY), a sharp profitability turnaround (net margin from -46.6% to 6.1%), and a compelling forward P/E of 9.4x implying 47% upside to analyst targets. However, the bear case highlights a trailing P/E of 78.1x (5x industry average), negative free cash flow of -$166.1M, and a stock down 58.6% over the past year. The single most important tension is whether the company can sustain its growth trajectory and convert it into consistent free cash flow—if it does, the forward multiple is deeply undervalued; if not, the trailing multiple leaves no room for error. Currently, the bull case has stronger evidence given the improving fundamentals, but the stock's volatility (beta 2.27) demands a long-term horizon.
Bullish
- Revenue Growth Accelerating Sharply: Q4 2025 revenue of $304.2M grew 34.4% YoY, up from Q1 2025's roughly flat growth and Q2 2024's decline. This acceleration is driven by strong personal and auto lending segments, validating the AI model's scalability.
- Profitability Turnaround Achieved: Net income turned positive at $18.6M in Q4 2025 (net margin 6.1%), compared to a net loss of -$64.6M in Q1 2024. Operating margin improved to 6.3% from -46.6% over the same period, demonstrating strong operating leverage.
- Forward P/E Implies Deep Value: With a forward P/E of 9.4x based on average EPS estimate of $5.12, the stock appears undervalued relative to its growth rate. The implied price target of ~$48.1 suggests 47% upside from the current $32.74.
- Institutional Confidence Emerging: Hidden Lake's purchase of 316,000 shares worth $13.8 million in February 2026 signals institutional conviction. Recent analyst upgrades from BTIG (Buy) and Compass Point (Neutral from Sell) indicate improving sentiment.
Bearish
- Trailing P/E at Extreme Premium: The trailing P/E of 78.1x is over 5x the industry average of ~15x, implying the market is pricing in aggressive future growth. Any earnings miss could trigger severe multiple compression.
- Negative Free Cash Flow Persists: Free cash flow over the trailing twelve months was -$166.1M, indicating the company is still burning cash despite reported profitability. This raises concerns about sustainability and reliance on debt financing.
- High Debt-to-Equity Ratio: Debt-to-equity of 2.32 is elevated, reflecting significant leverage. Interest expense of $27.95M in Q4 2025 consumes a material portion of operating income, increasing financial risk.
- Stock in Deep Downtrend: The 1-year price change is -58.57%, vastly underperforming the S&P 500's +20.63%. The stock is at 37.5% of its 52-week range, indicating persistent selling pressure and lack of momentum.
UPST Technical Analysis
Upstart is in a deep downtrend over the past year, with a 1-year price change of -58.57%, significantly underperforming the S&P 500's +20.63% gain. The current price of $32.74 sits at 37.5% of its 52-week range ($23.97 low to $87.30 high), indicating it is closer to the low end. This positioning suggests the stock is deeply beaten down, potentially offering a value opportunity, but also reflects persistent selling pressure and a lack of momentum. Short-term momentum shows a conflicting picture: the 1-month change is +8.05%, while the 3-month change is +20.10%, both positive and contrasting with the 1-year decline. This divergence could signal a potential trend reversal or a temporary mean-reversion bounce within a broader downtrend. The stock's beta of 2.267 implies it is 126.7% more volatile than the market, amplifying both upside and downside moves. Key support is at the 52-week low of $23.97; a breakdown below this level would signal further downside risk. Resistance is at the 52-week high of $87.30; a breakout above would indicate a major trend reversal. The recent price action shows a recovery from the March low of $24.22 to the current $32.74, but the stock remains well below its 200-day moving average.
Beta
2.27
2.27x market volatility
Max Drawdown
-71.2%
Largest decline past year
52-Week Range
$24-$87
Price range past year
Annual Return
-58.4%
Cumulative gain past year
| Period | UPST Return | S&P 500 |
|---|---|---|
| 1m | +3.1% | +1.0% |
| 3m | +6.5% | +7.9% |
| 6m | -32.3% | +8.5% |
| 1y | -58.4% | +20.1% |
| ytd | -31.4% | +9.9% |
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UPST Fundamental Analysis
Revenue growth has accelerated dramatically: Q4 2025 revenue of $304.2M grew 34.4% year-over-year, up from Q1 2025's $220.4M (which was roughly flat YoY) and Q2 2024's $139.1M (which declined). The sequential improvement is driven by strong growth in personal and auto lending segments, with borrower fees and servicing fees contributing significantly. However, the growth rate is still below the triple-digit levels seen in 2021, and the company faces headwinds from rising interest rates and competition. Profitability has improved sharply: net income turned positive at $18.6M in Q4 2025 (net margin 6.1%), compared to a net loss of -$64.6M in Q1 2024. Gross margin remains high at 90.8% in Q4 2025, though slightly down from 97.0% in Q2 2025 due to a shift in product mix. Operating margin improved to 6.3% in Q4 2025 from -46.6% in Q1 2024, indicating strong operating leverage. The balance sheet shows adequate liquidity with a current ratio of 2.99 and cash of $1.06B as of Q4 2025. However, free cash flow was negative -$166.1M over the trailing twelve months, and debt-to-equity is elevated at 2.32, indicating reliance on debt financing. ROE improved to 6.7% from negative levels, but remains low relative to the cost of equity.
Quarterly Revenue
$304168000.0B
2025-12
Revenue YoY Growth
+34.35%
YoY Comparison
Gross Margin
90.81%
Latest Quarter
Free Cash Flow
$-166132000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is UPST Overvalued?
Since net income is positive (TTM net income of $53.6M), the primary valuation metric is the P/E ratio. The trailing P/E is 78.1x, while the forward P/E is 9.4x, implying the market expects significant earnings growth. The gap between trailing and forward P/E suggests aggressive growth expectations embedded in the forward multiple. Compared to the industry average (Financial - Credit Services), Upstart's trailing P/E of 78.1x is a substantial premium; the industry average P/E is approximately 15x, making Upstart's multiple over 5x higher. This premium may be justified by its high revenue growth (34% YoY) and improving profitability, but it also leaves little room for error. Historically, Upstart's trailing P/E has ranged from negative (during loss periods) to over 200x in 2021. The current 78.1x is well below its historical peak but still elevated relative to the broader market. The P/S ratio of 3.9x is also below its historical average of ~20x, suggesting the stock is cheap on a sales basis, reflecting the market's skepticism about sustained profitability.
PE
78.1x
Latest Quarter
vs. Historical
High-End
5-Year PE Range -515x~292x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
68.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Upstart's balance sheet shows elevated leverage with a debt-to-equity ratio of 2.32, and interest expense of $27.95M in Q4 2025 consumes a significant portion of operating income. Despite reporting positive net income, free cash flow over the trailing twelve months is negative -$166.1M, indicating that the company is still burning cash. The net margin of 6.1% is thin, leaving little cushion for any revenue deceleration or cost overruns. Revenue concentration in personal lending (though diversifying into auto and mortgage) adds vulnerability to shifts in consumer credit demand.
Market & Competitive Risks: The stock's beta of 2.267 implies it is 126.7% more volatile than the market, making it highly sensitive to macro factors like interest rates and credit cycles. The trailing P/E of 78.1x is a substantial premium to the industry average of ~15x, creating valuation compression risk if growth disappoints. Competition from established players building their own AI tools (as noted in recent news) threatens Upstart's competitive moat. Regulatory risks around AI lending models and the planned transition to becoming a bank introduce additional uncertainty.
Worst-Case Scenario: If revenue growth decelerates below 10% or the company fails to achieve sustained positive free cash flow, the stock could re-rate to its 52-week low of $23.97, representing a -26.8% decline from the current $32.74. In a severe recession with rising defaults, the stock could fall further to historical lows around $20, implying a -38.9% loss. The max drawdown of -71.21% from the 52-week high of $87.30 illustrates the potential for extreme downside.
FAQ
The key risks are: 1) Financial risk: negative free cash flow of -$166.1M and debt-to-equity of 2.32, which could lead to liquidity issues if growth stalls. 2) Valuation risk: trailing P/E of 78.1x is extremely high, making the stock vulnerable to multiple compression. 3) Competitive risk: established players are building their own AI tools, threatening Upstart's moat. 4) Macro risk: beta of 2.27 means the stock is highly sensitive to interest rates and credit cycles. The most severe risk is a growth deceleration that triggers a re-rating to the 52-week low of $23.97, a -26.8% decline.
The 12-month outlook is cautiously bullish. The base case (45% probability) sees the stock trading between $35 and $45, driven by sustained 20-25% revenue growth and stable margins. The bull case (30% probability) targets $45-$55 if growth accelerates and free cash flow turns positive. The bear case (25% probability) sees the stock falling to $24-$30 if growth disappoints. The most likely scenario is the base case, with the stock gradually appreciating as the market recognizes the fundamental improvement. Key assumptions include sustained auto loan growth and stable credit conditions.
On a trailing basis, UPST is overvalued with a P/E of 78.1x, over 5x the industry average of ~15x. However, on a forward basis, the P/E of 9.4x is deeply undervalued relative to its growth rate (34.4% YoY). The P/S ratio of 3.9x is below its historical average of ~20x, suggesting the market is pricing in skepticism. The valuation implies the market expects significant earnings growth, which is reflected in the forward multiple. If the company delivers on those expectations, the stock is undervalued; if not, the trailing multiple leaves no room for error.
UPST offers a compelling risk/reward for investors with a high risk tolerance. The forward P/E of 9.4x implies 47% upside to the average analyst target of ~$48.1, supported by accelerating revenue growth of 34.4% YoY and improving profitability. However, the trailing P/E of 78.1x is a red flag, and negative free cash flow of -$166.1M means the company is still burning cash. It is a good buy for those who believe the growth trajectory is sustainable and can tolerate volatility (beta 2.27). Conservative investors should wait for free cash flow to turn positive.
UPST is better suited for long-term investment (3-5 years) due to its high volatility (beta 2.27) and speculative nature. Short-term trading is risky given the stock's -58.57% 1-year decline and sensitivity to earnings reports. The company is in a turnaround phase, and it may take several quarters for the market to fully price in the improving fundamentals. A minimum holding period of 2-3 years is recommended to allow the growth story to play out. The stock pays no dividend, so total return depends entirely on price appreciation.