Upstart Holdings
UPST
$25.00
+0.93%
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 three reporting segments: Personal Lending (unsecured and small-dollar loans), Auto Lending (refinance, retail, and secured auto loans), and Other (HELOCs and adjacent products). The company is a fintech disruptor rather than a balance-sheet lender, positioning itself as an infrastructure and decisioning layer that monetizes loan originations, servicing, and referral fees while shifting credit risk to partners. The current investor narrative is a tug-of-war between a genuine fundamental recovery — Q1 2026 revenue of $308.2 million grew 39.85% year over year, extending a multi-quarter acceleration — and a sharp deterioration in profitability and cash generation that has reignited bearish sentiment. Recent coverage frames the debate around whether Upstart's AI underwriting model can scale into auto and home lending before competitive encroachment from incumbent banks building in-house AI tools, interest-rate sensitivity, and its proposed bank charter erode the growth premium.…
UPST
Upstart Holdings
$25.00
Related headlines
Investment Opinion: Should I buy UPST Today?
The synthesized recommendation is Hold, with a speculative bias. The core thesis is that Upstart's revenue growth of 39.85% YoY and forward PE of 7.19x present a compelling value opportunity, but the sharp deterioration in profitability and cash flow creates too much uncertainty for a Buy rating. The analyst consensus of 'buy' with an average target of $40.00 (60% upside) supports a positive long-term view, but the recent Sell rating and estimate cuts suggest near-term headwinds.
Supporting evidence includes: 1) Revenue growth of 39.85% YoY, well above the sector average; 2) Gross margin of 98.1%, indicating a strong competitive moat; 3) Forward PE of 7.19x, which is extremely low if earnings materialize; 4) Analyst average target of $40.00, implying 60% upside. However, these positives are offset by negative FCF of -$286.8 million, a net loss of $6.65 million in Q1 2026, and a debt-to-equity ratio of 2.32x. The stock's 63.26% one-year decline and position near its 52-week low reflect deep pessimism.
The biggest risks that could invalidate the thesis are: 1) Continued cash burn leading to a liquidity crisis; 2) Failure to achieve the projected EPS of $5.85, causing the forward PE to balloon; 3) Competitive pressures from banks building in-house AI. The rating would upgrade to Buy if Q2 2026 shows positive operating income and FCF, or if the stock drops below $20 with improving fundamentals. It would downgrade to Sell if cash burn accelerates or if the bank charter is rejected. Relative to its history, the stock is undervalued (PS of 3.90x vs. peak of 132.9x), but fairly valued relative to current growth and profitability. This is not personalized financial advice.
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UPST 12-Month Price Forecast
Upstart presents a classic high-risk, high-reward scenario. The revenue growth is impressive, but the profitability collapse is alarming. The forward PE of 7.19x suggests the market is pricing in a recovery, but the negative FCF and cash burn indicate that recovery is not guaranteed. The analyst consensus is bullish, but the recent Sell rating and estimate cuts show growing skepticism. I would upgrade to bullish if Q2 2026 shows positive operating income and FCF, and downgrade to bearish if cash burn accelerates or if the stock breaks below $23.965. The high beta of 2.165 means position sizing should be conservative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Upstart Holdings's 12-month outlook, with a consensus price target around $40.00 and implied upside of +60.0% versus the current price.
Average Target
$40.00
0 analysts
Implied Upside
+60.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$20 - $61
Analyst target range
Sixteen analysts cover Upstart with a consensus recommendation of "buy" (recommendation mean of 2.2 on a 1-5 scale where lower is more bullish), and an average price target of $40.00 — implying +60% upside from the current $25.00 price. This is a strongly bullish consensus relative to the stock's actual performance, and the divergence between analyst optimism and the -63.26% one-year price decline is striking. The consensus leans bullish, but the recent institutional ratings flow tells a more nuanced story: BTIG upgraded from Neutral to Buy on 2026-03-16, and firms including Needham, Piper Sandler, and Mizuho have maintained Buy/Overweight/Outperform ratings through mid-2026, yet Goldman Sachs reiterated Neutral on 2026-07-09 and at least one Sell rating has emerged per recent news coverage. The pattern is one of maintained bullish ratings against a deteriorating tape, which often precedes estimate cuts and downgrades. The target range spans $20.00 to $61.00 — a 3.05x spread between low and high that signals very high uncertainty and low conviction among analysts. The high target of $61.00 (144% above current price) assumes a full earnings recovery, multiple expansion back toward historical norms, and successful scaling of auto and HELOC originations; the low target of $20.00 (20% below current price) prices in continued margin compression, credit deterioration, and failure to convert revenue growth into profit. The wide spread, combined with the stock trading near its 52-week low while the average target sits 60% higher, suggests analysts are anchoring to a recovery thesis that the market is aggressively discounting. The forward EPS estimates of $5.85 average (range $5.48-$6.28) and revenue estimates of $3.57 billion average imply the Street expects a dramatic profitability inflection — if Q2 2026 results fail to show progress toward that inflection, the consensus target has significant downside revision risk.
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Bulls vs Bears: UPST Investment Factors
The bear case currently has stronger evidence due to the sharp deterioration in profitability and cash flow, which directly contradicts the bullish revenue growth narrative. The most important tension is whether Upstart's 39.85% revenue growth can translate into sustainable profits before cash reserves are depleted. While the forward PE of 7.19x and analyst target of $40.00 suggest deep undervaluation, the negative FCF of -$286.8 million and net loss of $6.65 million indicate that the market is pricing in a recovery that has yet to materialize. The stock's position near its 52-week low and high short interest create potential for a squeeze, but the fundamental deterioration makes this a high-risk, high-reward situation. Ultimately, the resolution of the profitability inflection will determine whether this is a value trap or a generational buying opportunity.
Bullish
- Revenue growth accelerating at 39.85% YoY: Q1 2026 revenue of $308.2 million grew 39.85% year over year from $220.4 million, marking the fourth consecutive quarter of sequential growth from $265.1M in Q2 2025 to $304.2M in Q4 2025. This acceleration is rare in fintech and demonstrates that Upstart's AI lending marketplace is gaining traction despite macro headwinds.
- Forward PE of 7.19x implies deep undervaluation: The forward PE of 7.19x is extraordinarily low for a company growing revenue at nearly 40%, especially compared to its trailing PE of 78.09x. This gap suggests the market is pricing in a massive earnings recovery that, if realized, would make the current price look like a bargain.
- Analyst consensus target implies 60% upside: Sixteen analysts have a consensus 'buy' rating with an average price target of $40.00, representing 60% upside from the current $25.00 price. The high target of $61.00 implies 144% upside, reflecting confidence in the company's long-term earnings power.
- Gross margin remains exceptionally high at 98.1%: Q1 2026 gross margin was 98.1%, with gross profit of $302.4 million on $308.2 million revenue. This capital-light, fee-based model has minimal cost of revenue, providing significant operating leverage potential once fixed costs are absorbed.
Bearish
- Profitability collapsed to -$6.65M net loss: Q1 2026 net income swung to a loss of $6.65 million from a profit of $18.6 million in Q4 2025 and $31.8 million in Q3 2025. This dramatic reversal, with net margin falling to -2.16% from +11.12% two quarters prior, signals severe operational deterioration.
- Free cash flow deeply negative at -$286.8M TTM: Trailing free cash flow is -$286.8 million, with Q1 2026 operating cash flow of -$133.3 million and FCF of -$140.3 million. The company is burning cash to fund growth, and the negative price-to-cash-flow ratio of -28.43 underscores that cash generation has broken down.
- Stock down 63% in a year, near 52-week low: UPST has declined 63.26% over the past year and 45.46% year to date, vastly underperforming the S&P 500's +15.01% and +11.70% returns. At $25.00, it sits just 2.1% above its 52-week low of $23.965, with a maximum drawdown of -67.16%.
- Operating expenses exceed revenue: Q1 2026 operating expenses of $309.9 million exceeded revenue of $308.2 million, driven by $104.5 million in sales and marketing and $80.1 million in R&D. This cost structure makes it difficult to achieve profitability without significant revenue growth or cost cuts.
UPST Technical Analysis
Upstart is locked in a sustained downtrend, with the shares down 63.26% over the past year and 45.46% year to date, a stark underperformance against the S&P 500's +15.01% one-year and +11.70% YTD returns. At $25.00, the stock sits at just 2.1% above its 52-week low of $23.965 and roughly 65% below its 52-week high of $71.38, placing it in the bottom 3% of its 52-week range — a positioning that signals capitulation-style weakness rather than a constructive base, and one that historically invites either mean-reversion bounces or further breakdown. The maximum drawdown of -67.16% confirms this is a deeply damaged chart where rallies have consistently been sold. Short-term momentum reinforces the bearish tape: the stock is down 18.30% over the past month and 22.91% over three months, meaning the 1-month decline is steeper than the 3-month decline, indicating momentum is decelerating further rather than stabilizing. Relative strength is uniformly negative across every window — -17.34% versus SPY over one month, -24.91% over three months, and -78.27% over one year — a persistent divergence that argues against a near-term trend reversal absent a fundamental catalyst. The 5.48 short ratio (days-to-cover) suggests meaningful short positioning that could fuel sharp squeezes on any positive surprise, but the tape has yet to show the volume-backed reversal that would confirm one. Key technical levels are tightly defined: support rests at the 52-week low of $23.965, just $1.04 below the current $25.00 price, while resistance is the 52-week high of $71.38, a level so distant it offers little practical guidance — intermediate resistance would likely form around the $30-$33 zone where the stock repeatedly failed in July and August. A decisive breakdown below $23.965 would open fresh downside with no visible support, whereas reclaiming $30 would be the first evidence of a durable bottom. With a beta of 2.165, Upstart is more than twice as volatile as the broader market, meaning position sizing should be materially smaller than a market-weight allocation and stop-losses must accommodate wide daily swings.
Beta
2.17
2.17x market volatility
Max Drawdown
-67.2%
Largest decline past year
52-Week Range
$24-$67
Price range past year
Annual Return
-63.3%
Cumulative gain past year
| Period | UPST Return | S&P 500 |
|---|---|---|
| 1m | -18.3% | -0.5% |
| 3m | -22.9% | +2.3% |
| 6m | -3.8% | +16.6% |
| 1y | -63.3% | +14.8% |
| ytd | -45.5% | +11.7% |
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UPST Fundamental Analysis
Upstart's revenue trajectory is genuinely strong even as the stock collapses: Q1 2026 revenue of $308.2 million rose 39.85% year over year from $220.4 million in Q1 2025, capping a sequence of quarterly gains from $265.1 million in Q2 2025 and $285.9 million in Q3 2025 to $304.2 million in Q4 2025. This is accelerating growth, not decelerating — the 39.85% YoY rate is well above the prior-year comparisons — and the fee-based revenue mix (servicing fees net of $52.4 million, servicing fees of $32.3 million, borrower fees of $10.1 million) shows a diversified, capital-light monetization engine. However, the growth is not translating into earnings: Q1 2026 net income swung to a loss of $6.65 million from a profit of $18.6 million in Q4 2025 and $31.8 million in Q3 2025, a dramatic reversal that suggests rising credit costs, funding constraints, or heavy investment spending are consuming the top-line gains. The gap between revenue growth and profit deterioration is the central fundamental tension in the story. Profitability has deteriorated sharply at the margin: Q1 2026 gross margin remained exceptionally high at 98.1% (gross profit of $302.4 million on $308.2 million revenue), but operating income turned negative at -$7.5 million and EBITDA was -$1.66 million, down from positive EBITDA of $25.6 million in Q4 2025 and $38.1 million in Q3 2025. The net margin of -2.16% in Q1 2026 contrasts with +6.13% in Q4 2025 and +11.12% in Q3 2025, a compression of more than 13 percentage points in two quarters. Operating expenses of $309.9 million — including $104.5 million in sales and marketing and $80.1 million in R&D — now exceed revenue, and the trailing operating margin of 5.05% masks the recent quarterly deterioration. For a platform business with 95%+ gross margins, the inability to convert scale into operating leverage is a red flag that the market is pricing aggressively. The balance sheet shows a company burning cash to fund growth: trailing free cash flow is -$286.8 million, with Q1 2026 operating cash flow of -$133.3 million and free cash flow of -$140.3 million, a sharp reversal from positive FCF of $104.6 million in Q4 2025. Debt-to-equity stands at 2.32x with a debt ratio of 0.668, and while the current ratio of 2.99 and cash balance of $931.3 million provide near-term liquidity, the company repurchased $100.1 million of stock in Q1 2026 while burning cash — a questionable capital allocation signal. ROE of 6.71% and ROA of 1.98% are modest for a financial platform, and the negative price-to-cash-flow ratio of -28.43 underscores that cash generation has broken down. Upstart is currently dependent on external financing and balance-sheet management to fund operations, which elevates financial risk in a rising-rate or credit-tightening environment.
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
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Valuation Analysis: Is UPST Overvalued?
Because Upstart's trailing net income is positive but razor-thin (EPS of $0.0128), the trailing PE of 78.09x is technically valid but economically meaningless — a single penny of earnings distortion makes it useless as a valuation anchor. The more informative metric is the forward PE of 7.19x, which implies the market expects earnings to explode from near-zero to roughly $3.48 per share (based on the $25.00 price), a dramatic inflection that the analyst consensus EPS estimate of $5.85 for the forward period supports. The enormous gap between trailing PE (78.09x) and forward PE (7.19x) signals that the market is pricing in a violent earnings recovery — if that recovery fails to materialize, the stock has substantial downside. The PS ratio of 3.90x and EV/Sales of 3.12x provide a cleaner read on the core business. Relative to the Financial Services / Credit Services sector, Upstart's PS of 3.90x is difficult to benchmark precisely without a stated industry average, but the PB ratio of 5.26x is rich for a company earning a 6.71% ROE — a 5.26x book multiple on sub-7% returns implies the market is paying for future ROE expansion, not current profitability. The EV/EBITDA of 68.12x is extraordinarily elevated and reflects the near-zero EBITDA base rather than a genuine premium; on a normalized EBITDA basis the multiple would compress dramatically. The premium embedded in these multiples is justified only if Upstart's AI lending platform scales into auto and home equity with expanding margins — a thesis that Q1 2026's negative EBITDA directly contradicts. Historically, Upstart's valuation has been far more extreme: the PS ratio reached 132.9x in Q3 2021 and 48.9x in Q4 2021 at the peak of the growth-stock mania, and has since compressed to the current 3.90x — a roughly 97% decline from peak multiples. The PB ratio has fallen from 42.3x in Q3 2021 to 5.26x today, and the trailing PE has swung from 213.8x in Q3 2021 to 78.09x now. On a historical basis, Upstart is trading near the bottom of its own valuation band, which could signal either a genuine value opportunity or, more likely given the deteriorating fundamentals, a value trap where the market is correctly repricing a broken growth-to-profit conversion story. The forward PE of 7.19x is the single most important number: it is either the market's most compelling mispricing or its most dangerous optimism.
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
Upstart faces significant financial and operational risks, primarily stemming from its deteriorating profitability and cash burn. Q1 2026 net income swung to a loss of $6.65 million from a profit of $18.6 million in Q4 2025, with operating income turning negative at -$7.5 million and EBITDA at -$1.66 million. The company's trailing free cash flow is -$286.8 million, and it repurchased $100.1 million of stock in Q1 2026 while burning cash, which raises questions about capital allocation. With debt-to-equity at 2.32x and a current ratio of 2.99, liquidity is adequate for now, but continued cash burn could strain the balance sheet if funding conditions tighten. Additionally, revenue is concentrated in personal lending, and the push into auto and HELOC segments requires significant investment, adding execution risk.
Market and competitive risks are elevated due to Upstart's premium valuation and high beta. The stock trades at a PS ratio of 3.90x and a PB ratio of 5.26x, which is rich for a company with a 6.71% ROE and negative FCF. The forward PE of 7.19x assumes a dramatic earnings recovery, and any failure to meet that expectation could lead to severe multiple compression. With a beta of 2.165, Upstart is more than twice as volatile as the market, making it highly sensitive to macro shifts, interest rate changes, and sector rotation. Competitive threats are mounting as incumbent banks build in-house AI tools, potentially eroding Upstart's value proposition. Recent news highlights a Sell rating and analyst estimate cuts, signaling growing skepticism.
In a worst-case scenario, a continued deterioration in credit quality, failure to achieve profitability, and a breakdown below the 52-week low of $23.965 could trigger a further sell-off. The analyst low target of $20.00 represents a 20% downside from the current $25.00 price, and if the stock breaks below $23.965, there is no visible technical support until much lower levels. Given the maximum drawdown of -67.16%, a similar decline from current levels would take the stock to approximately $8.21, implying a loss of about 67%. This scenario would likely involve a recession, rising credit losses, and a failed bank charter application, leading to a liquidity crisis.
FAQ
The most severe risk is financial: Upstart burned $140.3 million in free cash flow in Q1 2026 and has a debt-to-equity ratio of 2.32x. Continued cash burn could force a dilutive equity raise or lead to a liquidity crisis. Second, competitive risk is rising as incumbent banks build in-house AI lending tools, potentially eroding Upstart's market share. Third, macro risk is high due to a beta of 2.165; rising interest rates could reduce loan demand and increase credit losses. Fourth, company-specific risk includes the pending bank charter application, which, if rejected, could delay the path to profitability. These risks are ranked from most to least severe, with financial and competitive risks being the most immediate.
Our 12-month forecast has three scenarios. The base case (50% probability) targets $30-$40, assuming revenue grows 20-30% and EPS reaches $3-$4, below consensus. The bull case (25% probability) targets $50-$61, driven by successful scaling of auto/HELOC lending and EPS of $5.85. The bear case (25% probability) targets $20-$24, assuming continued cash burn and a break below the 52-week low. The most likely scenario is the base case, as it balances growth with ongoing profitability challenges. The key assumption is that Upstart will make progress on cost controls but will not fully achieve the consensus EPS estimate. A positive Q2 earnings report could shift probabilities toward the bull case.
UPST's valuation is a tale of two metrics. On a trailing basis, the PE of 78.09x and PB of 5.26x appear expensive, especially given a 6.71% ROE and negative FCF. However, the forward PE of 7.19x is extremely low, implying the market expects earnings to explode from near-zero to $5.85 per share. The PS ratio of 3.90x is near the bottom of its historical range (peak of 132.9x in Q3 2021), suggesting the stock is undervalued relative to its own history. But the market is pricing in a recovery that has yet to materialize, so the stock is fairly valued at best until profitability improves. If the earnings recovery fails, the stock could be significantly overvalued.
UPST is a high-risk, high-reward stock that is not suitable for all investors. The bull case rests on 39.85% revenue growth, a forward PE of 7.19x, and a 60% upside to the analyst average target of $40.00. However, the bear case is equally compelling: a net loss of $6.65 million in Q1 2026, negative free cash flow of -$286.8 million, and a stock price down 63.26% over the past year. The wide analyst target range of $20 to $61 reflects deep uncertainty. For risk-tolerant investors with a long-term horizon, a small position could be justified as a speculative bet on an earnings recovery. However, conservative investors should avoid until profitability and cash flow turn positive.
UPST is more suitable for long-term investment by risk-tolerant investors, but with a minimum holding period of 2-3 years to allow for a potential turnaround. The company is in a growth stage, reinvesting heavily in sales and marketing ($104.5 million in Q1 2026) and R&D ($80.1 million), and pays no dividend. The high beta of 2.165 and 67.16% maximum drawdown make it unsuitable for short-term trading unless one is a skilled trader. Earnings visibility is low, with a wide analyst target range of $20-$61. For short-term traders, the high short interest (5.48 days-to-cover) could create squeeze opportunities, but the overall trend is down. Long-term investors should be prepared for volatility and monitor quarterly progress toward profitability.
