Upstart Holdings (UPST) Stock Forecast & Price Target

Upstart Holdings Inc. has demonstrated significant growth, with loan volumes increasing 127.5% year-over-year, primarily driven by demand from near-prime borrowers and a diverse range of loan products. The company is projected to achieve a robust revenue growth rate of 63% in 2025, coupled with a notable improvement in EBITDA margins, which are expected to rise from 20% to approximately 30% by 2026. As automation in originations surpasses 90% and the company implements stronger underwriting practices, Upstart is well-positioned to enhance its long-term profitability and maintain solid credit performance.

Upstart Holdings Inc. reported third-quarter revenues that fell below expectations, with management attributing this shortfall to a conservative response from their AI underwriting model amid uncertain macroeconomic conditions, leading to a significant drop in conversion rates. Additionally, concerns have arisen over potential higher loss rates on loans underwritten by Upstart, which may adversely impact investor demand and result in negative valuations on existing loans. The company's guidance for fourth-quarter revenue also indicates a decline in contribution margins, further contributing to an increasingly negative outlook for its financial performance in the near term.