Upstart Holdings (UPST) AI Stock Analysis

• Market Cap: $3.66B
• Dividend Yield: N/A
• Average Volume (3M): 6.08M
• Price to Earnings (P/E): ―
• Beta (1Y): 4.42
• Revenue Growth: 24.50%
• EPS Growth: 49.38%
• Country: US
• Employees: 1,193
• Sector: Financial
• Sector Strength: 86
• Industry: Financial - Credit Services
• EPS (TTM): -1.46
• Shares Outstanding: 95,070,460
• 10 Day Avg. Volume: 8,373,890
• 30 Day Avg. Volume: 6,079,750
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 91.50
• Price to Cash Flow (P/CF): -11.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $82.82
• Price Target Upside: 112.41% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 13

Upstart Holdings shows potential with strategic growth initiatives and improved financial metrics, yet faces significant challenges in profitability and valuation. The recent earnings call and corporate events provide positive long-term signals, but immediate financial and technical analysis concerns temper the overall outlook.

Positive Factors

Funding and Capital

The influx of private credit capital is leading to more efficient funding dynamics for Upstart.

Growth and Profitability

UPST is poised to return to profitability in 2025 and deliver 50%+ year-over-year revenue growth.

Product Offering

Management believes small-dollar loans can enhance the overall UPST offering by bringing new customers into the funnel and building an underwriting model around them.

Negative Factors

Market Risks

Any macro downturn would cause material estimate revisions for Upstart.

Risk and Reward

The risk/reward skews to the downside due to the current valuation.

Valuation Concerns

The valuation remains too high with shares up 165% year-over-year and 12% year-to-date.

Upstart Holdings Business Overview & Revenue Model

Company Description

Upstart Holdings, Inc. is a financial technology company that operates within the personal lending sector. Leveraging artificial intelligence and machine learning, Upstart provides a lending platform that partners with banks and credit unions to offer consumer loans. The company's core service is its cloud-based AI lending platform, which aims to improve access to affordable credit while reducing the risk and costs associated with lending. By analyzing alternative data points beyond traditional credit scores, Upstart facilitates more inclusive loan approvals, which can benefit both borrowers and lending partners.

How the Company Makes Money

Upstart Holdings primarily makes money through fees collected from banks and credit unions that utilize its AI-driven lending platform. The company's revenue model includes a combination of referral fees, platform fees, and servicing fees. Referral fees are earned when a borrower is referred by Upstart to a lending partner and a loan is originated. Platform fees are charged to lending partners for the use of Upstart's platform to originate loans, while servicing fees are collected for managing the repayment process of these loans. Additionally, Upstart earns interest income from loans held on its balance sheet. The company also benefits from partnerships with various financial institutions which expand its reach and facilitate the scaling of its operations.

Upstart Holdings Financial Statement Overview

Summary

Upstart Holdings faces challenges in revenue consistency and profitability, reflected in negative margins on the income statement. The reduction in debt is a positive development, improving its financial stability. Cash flow improvements are encouraging, but the company needs to address income generation and profitability to enhance overall financial health.

Income Statement

Upstart Holdings has experienced significant volatility in its income statement metrics. The company has faced declining revenues over the years, with a notable decrease from $853 million in 2022 to $637 million in 2024. The net profit margin and EBIT margin have been negative for the past three years, indicating ongoing profitability challenges. However, the gross profit margin remains strong at 100% due to the absence of cost of goods sold figures provided.

Balance Sheet

The balance sheet shows a mixed picture. Upstart Holdings has improved its leverage position with a reduction in total debt to zero by 2024, significantly alleviating financial risk. The equity ratio remains moderate, suggesting a balanced capital structure. However, the consistent decline in stockholders' equity and the negative return on equity highlight concerns about sustaining shareholder value.

Cash Flow

Cash flow metrics have shown improvement, especially with the transition from negative operating cash flow in 2023 to positive in 2024. The free cash flow has also turned positive, which is a positive sign. However, the operating cash flow to net income ratio is volatile, indicating potential fluctuations in cash generation related to profitability.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
628.83M	508.12M	837.76M	846.61M	222.05M
	Gross Profit
628.83M	508.12M	837.76M	846.61M	222.05M
	EBIT
-172.86M	-256.52M	-113.86M	140.88M	11.77M
	EBITDA
-111.87M	-196.73M	-89.51M	152.93M	22.07M
	Net Income Common Stockholders
-128.58M	-240.13M	-108.67M	135.44M	5.98M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
829.67M	368.40M	422.41M	986.61M	250.82M
	Total Assets
2.37B	2.02B	1.94B	1.82B	477.25M
	Total Debt
1.45B	1.23B	1.09B	795.80M	82.06M
	Net Debt
658.84M	860.79M	664.77M	-190.81M	-168.76M
	Total Liabilities
1.73B	1.38B	1.26B	1.01B	177.00M
	Stockholders Equity
633.22M	635.30M	672.43M	807.08M	300.25M
Cash Flow		Free Cash Flow
185.49M	-172.58M	-697.59M	153.24M	10.09M
	Operating Cash Flow
186.33M	-160.49M	-674.68M	168.35M	15.70M
	Investing Cash Flow
-237.73M	-118.45M	-114.13M	-143.88M	136.52M
	Financing Cash Flow
559.87M	214.27M	130.03M	855.43M	79.05M

Upstart Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 38.99
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UPST, the sentiment is Negative. The current price of 38.99 is below the 20-day moving average (MA) of 45.87, below the 50-day MA of 57.81, and below the 200-day MA of 51.40, indicating a bearish trend. The MACD of -4.13 indicates Negative momentum. The RSI at 36.08 is Neutral, neither overbought nor oversold. The STOCH value of 17.77 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UPST.

Upstart Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YRD	84 Outperform	$481.32M	2.19	17.96%	3.38%	17.07%	-8.81%
WRLD	77 Outperform	$690.75M	8.51	19.28%	―	-2.78%	24.39%
WU	70 Outperform	$3.18B	3.47	129.04%	9.67%	-3.38%	63.33%
Sector *	64 Neutral	$13.37B	9.30	9.39%	4.85%	16.11%	-8.85%
OMF	63 Neutral	$5.15B	10.18	15.96%	9.64%	7.96%	-20.11%
LC	53 Neutral	$1.05B	20.23	3.96%	―	3.63%	27.77%
UPST	52 Neutral	$3.66B	―	-20.27%	―	24.50%	49.38%

Upstart Holdings Corporate Events

Upstart Holdings Expands Board, Appoints Peter Bernard

On February 18, 2025, Upstart Holdings announced an expansion of its Board of Directors to nine members and appointed Peter Bernard as a Class II director, effective February 19, 2025. Bernard, who has an extensive background in banking and risk management, currently chairs the board of Barclays Bank U.S., and has held prominent roles at firms like Root Capital and D.E. Shaw & Co. His appointment is set to enhance Upstart’s expertise in funding innovation and expansion, aligning with the company’s focus on leveraging AI in lending to make it more affordable, inclusive, and transparent.