UPST Should I Buy
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Upstart Holdings Inc (UPST) is not a strong buy at the moment for a beginner investor with a long-term strategy. Despite its strong revenue growth and ambitious long-term guidance, the stock faces significant challenges, including leadership changes, declining net income, and bearish technical indicators. Additionally, recent analyst downgrades and mixed sentiment in options data suggest caution. Holding off on investment until the stock shows stronger positive momentum or stability is recommended.
The technical indicators for UPST are bearish. The MACD histogram is negative and expanding downward, the RSI is neutral but leaning towards oversold territory, and the moving averages indicate a bearish trend (SMA_200 > SMA_20 > SMA_5). The stock is trading below key pivot levels, with immediate support at $31.259 and resistance at $35.813.
The company reported strong Q4 revenue growth of 35% YoY, reaching $296 million.
Management has provided ambitious long-term guidance, targeting a 35% CAGR over the next three years and a 25% adjusted EBITDA margin.
Leadership changes, including the departure of the co-founder and CEO, as well as the co-founder and CTO, could disrupt the company's strategy and operations.
Net income and EPS have significantly declined, with net income dropping by -776.44% YoY and EPS falling by -666.67% YoY.
Recent analyst downgrades and price target reductions reflect concerns over valuation and risks to the company's outlook.
The stock has experienced a sharp decline following Q4 results and mixed guidance.
In Q4 2025, Upstart reported a 33.09% YoY increase in revenue to $265.22 million. However, net income dropped significantly by -776.44% YoY to $18.64 million, and EPS fell by -666.67% YoY to $0.17. Gross margin improved slightly to 80.45%, up 1.03% YoY. While revenue growth is strong, profitability metrics have deteriorated sharply.
Analyst sentiment is mixed to negative. Recent downgrades include Citizens lowering its rating to Underperform with a $20 price target, citing valuation concerns. JPMorgan and Truist maintain positive ratings but have reduced their price targets to $84 and $49, respectively. Analysts acknowledge strong Q4 results but express concerns over valuation, leadership changes, and risks to the company's outlook.
