Upstart Disrupts Credit Scoring Industry with AI
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 25 2026
0mins
Should l Buy UPST?
Source: NASDAQ.COM
- Technological Disruption: Upstart leverages artificial intelligence to assess borrowers' creditworthiness by considering over 2,500 variables, resulting in a 43% increase in approval rates without additional defaults, significantly enhancing competitiveness in the auto loan market.
- Loan Performance: Since its inception in 2012, Upstart has originated over 5 million loans totaling more than $50 billion, with 1.5 million loans worth $11 billion issued last year alone, indicating strong market demand and growth potential.
- Profitability Improvement: Upstart reported a net income of over $54 million last year, reversing a $128 million loss in 2024, marking a significant improvement in profitability and positioning the company for continued growth.
- Market Outlook: Despite facing economic headwinds, Upstart's stock is priced at less than 10 times its anticipated per-share profit, reflecting investor confidence in its future growth, especially as traditional credit bureaus struggle with technological challenges.
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Analyst Views on UPST
Wall Street analysts forecast UPST stock price to rise
13 Analyst Rating
7 Buy
4 Hold
2 Sell
Moderate Buy
Current: 32.080
Low
20.00
Averages
56.73
High
80.00
Current: 32.080
Low
20.00
Averages
56.73
High
80.00
About UPST
Upstart Holdings, Inc. is an artificial intelligence (AI) lending marketplace. The Company’s platform includes personal loans, automotive retail and refinance loans, home equity lines of credit (HELOCs), and small dollar loans. It applies artificial intelligence models and cloud applications to the process of underwriting consumer credit. Its AI marketplace connects consumers with its lending partner. Its consumers can access Upstart-powered loans via Upstart.com, through a lender-branded product on its lending partners’ own websites, and through auto dealerships that use its Upstart Auto Retail software. Its platform enables lenders provide a product their customers want, rather than letting customers seek loans from competitors. Its cloud-based software platform incorporates technologies and software development approaches to allow for development of new features, such as cloud-native technologies, data integrity and security, and configurable multi-tenant architecture, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Upstart Shares Rise 23% on New Credit Product Launch
- Product Launch: Upstart's new credit product, 'Cash Line', received strong investor interest, contributing to a 23% stock increase last month, indicating market confidence in its innovation.
- Market Recovery: As tensions in the Middle East eased, Upstart's stock tracked the S&P 500's rise in mid-April, reflecting improved overall market sentiment and risk appetite.
- Financing Agreements: Upstart secured a $1.2 billion forward-flow agreement with Centerbridge to purchase consumer loans originated on its platform, enhancing liquidity and investor confidence.
- Earnings Expectations: Analysts forecast a 42% revenue increase to $303.4 million in Upstart's upcoming earnings report, with adjusted EPS expected to rise from $0.30 to $0.43, highlighting significant growth potential for the company.
See More
Fintech Stocks Surge on Private Credit Opportunities
- Market Sentiment Recovery: Fintech stocks broadly surged as tensions in Iran eased, with Upstart (NASDAQ: UPST) seeing a 23% increase, reflecting a renewed investor appetite for risk assets and boosting market confidence.
- New Product Launch: Upstart introduced its new credit product, 'Cash Line', which was well-received by investors, offering increasing credit limits and instant deposits, thereby enhancing the company's competitive position in the market.
- Financing Agreements Secured: Upstart secured a forward-flow agreement with Centerbridge for up to $1.2 billion, followed by a similar $1.25 billion agreement with Fortress, providing a stable funding source to support its loan origination business.
- Positive Earnings Expectations: Analysts project Upstart's revenue to jump 42% to $303.4 million in the upcoming quarter, with adjusted earnings per share expected to rise from $0.30 to $0.43, indicating significant growth potential as the company continues to execute effectively.
See More
Class Action Filed Against Upstart Holdings for Securities Violations
- Class Action Initiated: Pomerantz LLP has filed a class action lawsuit against Upstart Holdings in the Southern District of New York on behalf of investors who purchased Upstart securities between May 14, 2025, and November 4, 2025, seeking damages for violations of federal securities laws.
- Revenue Guidance Downgrade: Upstart reported Q3 2025 revenue of $277 million, missing its prior guidance of $280 million, and significantly lowered its Q4 revenue forecast to $288 million, well below the consensus estimate of $303.7 million, indicating serious operational challenges.
- AI Model Issues: During the earnings call, Upstart acknowledged that its latest AI model, Model 22, overreacted to macroeconomic signals, leading to decreased borrower approval rates and negatively impacting revenue, revealing that the model's risk assessment accuracy was overstated.
- Significant Stock Price Drop: Following the earnings report, Upstart's stock price fell by $4.49, or 9.71%, closing at $41.75 per share, reflecting investor concerns about the company's financial stability and future performance.
See More
Class Action Notice for Upstart Holdings Investors
- Class Action Timeline: Rosen Law Firm reminds investors who purchased Upstart Holdings securities between May 14, 2025, and November 4, 2025, to apply for the class action by June 8, 2026, to potentially receive compensation without any out-of-pocket costs.
- Lawsuit Background: The lawsuit alleges that Upstart made materially false and misleading statements regarding its Model 22's risk-separation processes and loan approval rates, which misled investors about the company's revenue guidance for 2025.
- Law Firm Credentials: Rosen Law Firm specializes in securities class actions and has achieved the largest securities class action settlement against a Chinese company, being ranked No. 1 by ISS Securities Class Action Services in 2017, highlighting its expertise and success in this field.
- Investor Action Recommendations: Investors can visit Rosen Law Firm's website or call the toll-free number for more information, emphasizing the importance of selecting qualified legal counsel to protect their rights, especially since the class has not yet been certified.
See More
Upstart Holdings Faces Class Action Lawsuit
- Class Action Initiated: Berger Montague PC announces a class action lawsuit against Upstart Holdings on behalf of investors who purchased shares between May 14, 2025, and November 4, 2025, indicating significant investor dissatisfaction with the company's performance.
- Declining Performance: Upstart reported Q3 2025 revenue of $277 million, falling short of market expectations, and revised its Q4 revenue forecast down to $288 million while lowering FY 2025 revenue from $1.055 billion to $1.035 billion, highlighting severe financial challenges facing the company.
- Model Failure Allegations: The complaint alleges that Upstart overstated the performance of its AI-driven lending platform Model 22, failing to disclose the model's overreaction to macroeconomic signals, which had a significant negative impact on revenue, further exacerbating investor concerns.
- Stock Price Plunge: Following the earnings report on November 5, 2025, Upstart's stock price dropped by $4.49, or 9.71%, closing at $41.75, reflecting the market's pessimism regarding the company's future prospects.
See More
Morgan Stanley Cuts Upstart Price Target Amid Model Concerns
- Analyst Downgrades: Morgan Stanley slashed Upstart's price target from $70 to $45, a 36% reduction, reflecting concerns over the company's AI underwriting model's ability to adapt to economic volatility, which may undermine investor confidence.
- Follow-Up Cuts by Firms: Goldman Sachs lowered its target from $54 to $40, Needham from $82 to $56, and Stephens & Co. from $55 to $40, indicating a widespread pessimism among analysts regarding Upstart's future performance.
- Declining Approval Rates: Upstart's loan approval rates fell from 23.9% in Q2 to 20.6% in Q3 2025, attributed to the AI model's overreaction, directly impacting the company's revenue and market performance.
- Increased Legal Risks: The significant stock price drop due to analysts' expectations based on incomplete disclosures has led to a class action lawsuit, posing potential financial repercussions for the company moving forward.
See More
Upstart Shares Rise 23% on New Credit Product Launch
- Product Launch: Upstart's new credit product, 'Cash Line', received strong investor interest, contributing to a 23% stock increase last month, indicating market confidence in its innovation.
- Market Recovery: As tensions in the Middle East eased, Upstart's stock tracked the S&P 500's rise in mid-April, reflecting improved overall market sentiment and risk appetite.
- Financing Agreements: Upstart secured a $1.2 billion forward-flow agreement with Centerbridge to purchase consumer loans originated on its platform, enhancing liquidity and investor confidence.
- Earnings Expectations: Analysts forecast a 42% revenue increase to $303.4 million in Upstart's upcoming earnings report, with adjusted EPS expected to rise from $0.30 to $0.43, highlighting significant growth potential for the company.
See More
Fintech Stocks Surge on Private Credit Opportunities
- Market Sentiment Recovery: Fintech stocks broadly surged as tensions in Iran eased, with Upstart (NASDAQ: UPST) seeing a 23% increase, reflecting a renewed investor appetite for risk assets and boosting market confidence.
- New Product Launch: Upstart introduced its new credit product, 'Cash Line', which was well-received by investors, offering increasing credit limits and instant deposits, thereby enhancing the company's competitive position in the market.
- Financing Agreements Secured: Upstart secured a forward-flow agreement with Centerbridge for up to $1.2 billion, followed by a similar $1.25 billion agreement with Fortress, providing a stable funding source to support its loan origination business.
- Positive Earnings Expectations: Analysts project Upstart's revenue to jump 42% to $303.4 million in the upcoming quarter, with adjusted earnings per share expected to rise from $0.30 to $0.43, indicating significant growth potential as the company continues to execute effectively.
See More
Class Action Filed Against Upstart Holdings for Securities Violations
- Class Action Initiated: Pomerantz LLP has filed a class action lawsuit against Upstart Holdings in the Southern District of New York on behalf of investors who purchased Upstart securities between May 14, 2025, and November 4, 2025, seeking damages for violations of federal securities laws.
- Revenue Guidance Downgrade: Upstart reported Q3 2025 revenue of $277 million, missing its prior guidance of $280 million, and significantly lowered its Q4 revenue forecast to $288 million, well below the consensus estimate of $303.7 million, indicating serious operational challenges.
- AI Model Issues: During the earnings call, Upstart acknowledged that its latest AI model, Model 22, overreacted to macroeconomic signals, leading to decreased borrower approval rates and negatively impacting revenue, revealing that the model's risk assessment accuracy was overstated.
- Significant Stock Price Drop: Following the earnings report, Upstart's stock price fell by $4.49, or 9.71%, closing at $41.75 per share, reflecting investor concerns about the company's financial stability and future performance.
See More
Class Action Notice for Upstart Holdings Investors
- Class Action Timeline: Rosen Law Firm reminds investors who purchased Upstart Holdings securities between May 14, 2025, and November 4, 2025, to apply for the class action by June 8, 2026, to potentially receive compensation without any out-of-pocket costs.
- Lawsuit Background: The lawsuit alleges that Upstart made materially false and misleading statements regarding its Model 22's risk-separation processes and loan approval rates, which misled investors about the company's revenue guidance for 2025.
- Law Firm Credentials: Rosen Law Firm specializes in securities class actions and has achieved the largest securities class action settlement against a Chinese company, being ranked No. 1 by ISS Securities Class Action Services in 2017, highlighting its expertise and success in this field.
- Investor Action Recommendations: Investors can visit Rosen Law Firm's website or call the toll-free number for more information, emphasizing the importance of selecting qualified legal counsel to protect their rights, especially since the class has not yet been certified.
See More
Upstart Holdings Faces Class Action Lawsuit
- Class Action Initiated: Berger Montague PC announces a class action lawsuit against Upstart Holdings on behalf of investors who purchased shares between May 14, 2025, and November 4, 2025, indicating significant investor dissatisfaction with the company's performance.
- Declining Performance: Upstart reported Q3 2025 revenue of $277 million, falling short of market expectations, and revised its Q4 revenue forecast down to $288 million while lowering FY 2025 revenue from $1.055 billion to $1.035 billion, highlighting severe financial challenges facing the company.
- Model Failure Allegations: The complaint alleges that Upstart overstated the performance of its AI-driven lending platform Model 22, failing to disclose the model's overreaction to macroeconomic signals, which had a significant negative impact on revenue, further exacerbating investor concerns.
- Stock Price Plunge: Following the earnings report on November 5, 2025, Upstart's stock price dropped by $4.49, or 9.71%, closing at $41.75, reflecting the market's pessimism regarding the company's future prospects.
See More
Morgan Stanley Cuts Upstart Price Target Amid Model Concerns
- Analyst Downgrades: Morgan Stanley slashed Upstart's price target from $70 to $45, a 36% reduction, reflecting concerns over the company's AI underwriting model's ability to adapt to economic volatility, which may undermine investor confidence.
- Follow-Up Cuts by Firms: Goldman Sachs lowered its target from $54 to $40, Needham from $82 to $56, and Stephens & Co. from $55 to $40, indicating a widespread pessimism among analysts regarding Upstart's future performance.
- Declining Approval Rates: Upstart's loan approval rates fell from 23.9% in Q2 to 20.6% in Q3 2025, attributed to the AI model's overreaction, directly impacting the company's revenue and market performance.
- Increased Legal Risks: The significant stock price drop due to analysts' expectations based on incomplete disclosures has led to a class action lawsuit, posing potential financial repercussions for the company moving forward.
See More
