Is Upstart Still Attractive After Volatile Swings and Rich AI Lending Valuation?

• If you are wondering whether Upstart Holdings is a bargain or a bubble at around $47 a share, you are not alone. This article is going to walk through the numbers with you.
• Despite being down 22.6% year to date and 30.0% over the last year, the stock has still delivered a 253.1% gain over three years and has jumped 24.1% in the last month after a recent pullback of 4.3% in the past week.
• These swings have come as investors reassess the future of AI driven lending platforms, with Upstart often in the headlines as a poster child for how technology might reshape consumer credit. At the same time, changing sentiment around interest rates and credit risk has kept the market divided on how much growth the company can sustain.
• Right now Upstart scores just 0/6 on our valuation checks, which suggests the market may be pricing in a lot of optimism. Next we will break down what different valuation methods say about that price tag and then finish with an additional lens for thinking about what the stock is worth.

Upstart Holdings scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Upstart Holdings Excess Returns Analysis

The Excess Returns model looks at how much profit a company can generate above the return that shareholders demand, then capitalizes those surplus profits into an intrinsic value per share.

For Upstart Holdings, the analysis starts with a Book Value of $7.65 per share and a Stable EPS of $2.71 per share, based on weighted future Return on Equity estimates from 6 analysts. With an Average Return on Equity of 26.48% and a Cost of Equity of $0.91 per share, the model estimates an Excess Return of $1.80 per share, indicating that management is expected to create value over and above the required shareholder return.

The Stable Book Value is projected to grow to $10.25 per share, supported by forecasts from 3 analysts. Combining these inputs, the Excess Returns framework arrives at an intrinsic value of about $42.35 per share. Compared with the current market price near $47, this implies the stock is roughly 11.1% overvalued on this basis.

Result: OVERVALUED

Our Excess Returns analysis suggests Upstart Holdings may be overvalued by 11.1%. Discover 916 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Upstart Holdings.

Approach 2: Upstart Holdings Price vs Earnings

For companies that are generating profits, the price to earnings ratio is often the most intuitive way to think about valuation because it directly links what investors pay to the earnings they get in return. A higher PE can be justified when a business is expected to grow earnings quickly and has relatively low risk, while slower growth or higher uncertainty usually warrants a lower, more conservative PE multiple.

Upstart currently trades on a PE of about 142.0x, which sits dramatically above both the Consumer Finance industry average of roughly 9.7x and the wider peer group average of about 11.4x. This gap suggests the market is pricing in exceptional growth and a successful scaling of its AI driven lending model, despite the cyclical and regulatory risks in consumer credit.

Simply Wall St also calculates a proprietary Fair Ratio of around 41.8x for Upstart, which represents the PE multiple that would be reasonable given its earnings growth outlook, risk profile, profit margins, industry and market cap. This tailored benchmark is more informative than a simple peer or industry comparison because it adjusts for the specific drivers and risks facing Upstart. Set against the current 142.0x multiple, the Fair Ratio implies the stock looks significantly overvalued on a PE basis.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1458 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Upstart Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an approach where you tell a simple story about a company and then connect that story to your own numbers for future revenue, earnings, margins and ultimately fair value. A Narrative on Simply Wall St, available to millions of investors on the Community page, links three things together: what you think will drive the business, how that translates into a financial forecast, and the fair value that drops out of those assumptions, making it easier to decide whether to buy, hold or sell by comparing your Fair Value to today’s Price. Because Narratives update dynamically when new information like earnings reports, partnerships or delinquency data arrives, they stay aligned with the latest facts rather than a one off spreadsheet. For Upstart Holdings, one Narrative might lean bullish and point to partnerships, HELOC growth and improving automation to support a higher fair value closer to $105, while another, more cautious Narrative might focus on credit risk, macro uncertainty and underwriting accuracy to justify a much lower fair value nearer $20.

Do you think there's more to the story for Upstart Holdings? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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