UPST Stock Risk & Deep Value Analysis
Upstart Holdings Inc
Financial Services • Credit Services
DVR Score
out of 10
What You Need to Know About UPST Stock
We analyzed Upstart Holdings Inc using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran UPST through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Aggressive. Here's what we found.
UPST Risk Analysis & Red Flags
What Could Go Wrong
The ongoing securities fraud class action lawsuits could result in substantial financial penalties and severely damage Upstart's reputation, undermining trust in its AI models and management, leading to further capital market apprehension and a prolonged stock decline.
Risk Matrix
Overall
Aggressive
Financial
High
Market
Medium
Competitive
Medium
Execution
High
Regulatory
Medium
Red Flags
- ⚠
Securities fraud class action lawsuits alleging misleading guidance and AI model overperformance.
- ⚠
CFO Sanjay Datta sold 7,982 shares, contributing to total insider selling over the last quarter.
- ⚠
FY 2025 revenue guidance revised down mid-year ($1.055B to $1.035B), which is a core claim in the lawsuits.
Upcoming Risk Events
- 📅
Unfavorable developments or prolonged litigation in securities fraud lawsuits
- 📅
Worsening macroeconomic conditions (elevated rates, tighter credit)
- 📅
Q1 2026 earnings miss or weak forward guidance
- 📅
Failure to rebuild consistent trust with capital markets for loan funding
When to Reconsider
- 🚪
Exit if securities fraud lawsuits result in significant adverse judgments or settlements.
- 🚪
Sell if Q1 2026 (or subsequent) earnings show a return to GAAP losses or a significant deterioration in contribution margins.
- 🚪
Exit if the stock breaks below its 52-week low of $24.22 with high volume.
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What Does Upstart Holdings Inc (UPST) Do?
Market Cap
$3.26B
Sector
Financial Services
Industry
Credit Services
Employees
1,193
Upstart Holdings, Inc., together with its subsidiaries, operates a cloud-based artificial intelligence (AI) lending platform in the United States. The company operates through three segments: Personal Lending, Auto Lending, and Other. Its platform includes personal loans, automotive retail and refinance loans, home equity lines of credit, and small dollar loans. Upstart Holdings, Inc. was founded in 2012 and is headquartered in San Mateo, California.
Visit Upstart Holdings Inc WebsiteInvestment Thesis
Upstart is a high-risk, high-reward investment banking on its AI-driven platform to revolutionize credit decisions within a massive addressable market. The company's pivot to a capital-light model, achieving GAAP profitability, and strong growth in loan facilitation demonstrate execution. If it successfully navigates the current legal challenges and rebuilds trust with capital markets, its proprietary AI and growing partner network could lead to significant market share gains and substantial long-term returns.
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UPST Price Targets & Strategy
12-Month Target
$58.75
Bull Case
$120.00
Bear Case
$25.00
Valuation Basis
25x forward P/E applied to FY26 consensus EPS of $2.35.
Entry Strategy
Consider dollar-cost averaging on dips towards the $25-$30 support zone, especially if positive news emerges regarding the legal proceedings or Q1 earnings beat expectations. Avoid aggressive buying until clarity on legal risks.
Exit Strategy
Take 50% profit at $80-$90 if momentum picks up, but consider a stop-loss order below the $24.22 (52-week low) to protect against further downside if legal risks escalate or financial performance deteriorates.
Portfolio Allocation
2% for aggressive risk tolerance (due to high risk and significant legal overhang).
Price Targets & Strategy
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Is UPST Financially Healthy?
Valuation
P/E Ratio
60.74
Forward P/E
20.23
Price/Book
6.09
Price/Sales
4.42
Profitability
Gross Margin
81.95%
Operating Margin
4.78%
Net Margin
5.13%
Return on Equity
7.29%
Revenue Growth
63.99%
EPS
$0.48
Balance Sheet
Current Ratio
2.15
Quick Ratio
2.15
Debt/Equity
2.29
Cash Flow
EBITDA
$73.05M
Other
Beta (Volatility)
2.41
Does UPST Have a Competitive Moat?
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🛡️ Narrow
Moat Trend
Eroding (due to legal challenges questioning the reliability and overperformance claims of the core AI models, which are central to the moat's credibility)
Moat Sources
2 Identified
The moat's durability is highly dependent on the legal outcome of the securities fraud allegations. If the AI model's performance and accuracy are successfully defended and validated, the data and network effects could create a strong, sustainable advantage. However, if allegations are proven, the moat could be severely weakened or disappear due to loss of trust.
Moat Erosion Risks
- •Adverse outcome from securities fraud class action lawsuits, discrediting the AI's efficacy.
- •Increased competition from traditional lenders adopting similar AI/ML technologies.
- •Regulatory changes that restrict AI-based lending practices or data utilization.
UPST Competitive Moat Analysis
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UPST Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral with underlying bearish concern due to legal issues, despite some retail investor optimism for AI disruption.
Institutional Sentiment
Neutral. Analyst consensus 'Hold' with a median target of $48. While some institutions like AQR and UBS AM have recently increased holdings, the insider selling and ongoing legal challenges likely temper overall enthusiasm.
Insider Activity (Form 4)
CFO Sanjay Datta sold 7,982 shares on 2026-02-20, representing a 2.8% reduction in his position. Insiders sold a total of 9,481 shares worth $282,201 over the last quarter, with no reported buys.
Options Flow
Normal options activity; no specific data on unusual put/call ratios or significant block trades available from the provided intelligence.
Earnings Intelligence
Next Earnings
2026-05-05
Surprise Probability
Medium
Historical Earnings Pattern
Historically, Upstart's stock has shown high volatility around earnings reports, reacting strongly to guidance revisions and capital market sentiments, with significant moves on both beats and misses.
Key Metrics to Watch
Competitive Position
Top Competitor
Unknown (not specified in research, likely traditional lenders or other fintech platforms)
Market Share Trend
Gaining market share in the AI-driven lending segment, evidenced by 86% YoY growth in loan volume facilitated and expanding partner network.
Valuation vs Peers
Trading at a forward P/S of 2.33x (based on FY26 consensus revenue) and a forward P/E of 14.6x (based on FY26 consensus EPS). This can be seen as a discount compared to high-growth tech peers, reflecting the current risks, but potentially a premium to traditional financial institutions.
Competitive Advantages
- •Proprietary AI models and extensive data for credit assessment beyond traditional FICO scores.
- •Broad network of 100+ bank and credit union partners for loan origination and funding.
- •Capital-light marketplace model enabling rapid scalability without significant balance sheet risk (if executed well).
Market Intelligence
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What Could Drive UPST Stock Higher?
Near-Term (0-6 months)
- •Q1 2026 Earnings Report (May 5, 2026)
- •Progress on capital-light model and loan volume growth
- •New CEO onboarding and strategic updates (expected May 1, 2026)
Medium-Term (6-18 months)
- •Resolution or significant progress in securities fraud class action lawsuits
- •Successful expansion of lending partnerships beyond 100+ current partners
- •Achievement of FY 2026 adjusted EBITDA margin targets (21%)
Long-Term (18+ months)
- •Establishment of a bank charter, reducing reliance on external capital markets
- •Significant market share capture in the multi-trillion-dollar credit market
- •Broad adoption of AI-driven lending across financial institutions
Catalysts & Growth Drivers
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What's the Bull Case for UPST?
- ✓
Clear resolution or favorable progress in the securities fraud lawsuits.
- ✓
Sustained acceleration in loan volume growth and conversion rates.
- ✓
Consistent improvement in GAAP profitability and positive free cash flow generation.
Bull Case Analysis
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Competing with UPST
See how Upstart Holdings Inc compares to related companies
| Company | Market Cap | DVR Score | P/E | Revenue | Profit Margin | Rev Growth | |
|---|---|---|---|---|---|---|---|
Upstart Holdings Inc UPST | $3.3B | 5.4 | 60.7 | $997.8M | 5.1% | 64.0% | |
Bank of America Corp BAC | $352.6B | 0.1 | 12.9 | $113.1B | 16.2% | 12.3% | Compare → |
JPMorgan Chase & Co. JPM | — | 1.5 | — | — | — | — | Compare → |
Mastercard Inc MA | — | 0.8 | — | — | — | — | Compare → |
Visa Inc V | $585.4B | 1.4 | 28.8 | $10.9B | 50.2% | 14.6% | Compare → |
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How Upstart Holdings Inc Makes Money
Upstart operates an AI lending marketplace that connects consumers seeking loans with banks and credit unions. It uses proprietary artificial intelligence models to assess borrower creditworthiness more accurately than traditional methods, helping lenders approve more loans with lower loss rates. Upstart primarily generates revenue through fees from banks for originating loans and servicing these loans, aiming to transition to a fully capital-light platform where it doesn't hold loans on its balance sheet.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Upstart Holdings Inc (UPST)?
As of April 22, 2026, Upstart Holdings Inc has a DVR Score of 5.4 out of 10, placing it in the "Proceed with Caution" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Upstart Holdings Inc?
Upstart Holdings Inc's market capitalization is approximately $3.3B. The company operates in the Financial Services sector within the Credit Services industry.
What ticker symbol does Upstart Holdings Inc use?
UPST is the ticker symbol for Upstart Holdings Inc. The company trades on the NMS.
What is the risk level for UPST stock?
Our analysis rates Upstart Holdings Inc's overall risk as Aggressive. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of UPST?
Upstart Holdings Inc currently has a price-to-earnings (P/E) ratio of 60.7. This is above the market average, suggesting the stock may be priced for high growth expectations.
Is Upstart Holdings Inc's revenue growing?
Upstart Holdings Inc has reported revenue growth of 64.0%. The company is showing strong top-line momentum.
Is UPST stock profitable?
Upstart Holdings Inc has a profit margin of 5.1%. The company is profitable but margins are modest.
How often is the UPST DVR analysis updated?
Our AI-powered analysis of Upstart Holdings Inc is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on April 22, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for UPST (Upstart Holdings Inc) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.