Upstart Holdings

UPST

Market cap $4.15B

Initiate coverage on Upstart Holdings, with a hold rating. Q3 showed Upstart's model can scale profitably, but macro and credit headlines can quickly cap loan originations and pressure guidance. Q3 delivered strong growth (originations $2.9B, +80% YoY; revenue $277.0M, +71% YoY), yet still missed Street revenue and originations expectations. Macroeconomic stress, tightening lending models, and recent private credit bankruptcies (especially in auto loans) raise concerns about sustaining growth and guidance.

Upstart developed an artificial intelligence (AI)-powered algorithm that analyzes over 2,500 data points to determine the creditworthiness of potential borrowers. Upstart stock is down 35% this year amid concerns about the financial health of consumers, despite the company's surging revenue.

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Recently, Zacks.com users have been paying close attention to Upstart (UPST). This makes it worthwhile to examine what the stock has in store.

Pagaya's capital-light model, expanding AI lending reach and stronger valuation set the stage for a compelling long-term growth outlook.

UPST adjusts its AI underwriting as rising risk trims conversions, with new calibration tools aimed at steadier approvals and broader loan expansion.

UPST's expanding push into auto, home, and small-dollar lending gains traction as new products scale and funding partners grow.

Rising credit risk has weighed on fintech stocks like Upstart. The business has demonstrated a number of improvements this year, even as the stock has pulled back.

Trump is considering a proposal that would expand a 30-year limit on mortgage terms to 50 years. Upstart recently released a home product that could become an important mortgage tool.

UPST's sharp three-month drop contrasts with a strong quarter as model shifts, funding gains and macro sensitivity shape a cautious hold outlook.