Upstart Holdings, Inc. (NASDAQ:UPST) Could Be Less Than A Year Away From Profitability

We feel now is a pretty good time to analyse Upstart Holdings, Inc.'s (NASDAQ:UPST) business as it appears the company may be on the cusp of a considerable accomplishment. Upstart Holdings, Inc., together with its subsidiaries, operates a cloud-based artificial intelligence (AI) lending platform in the United States. The US$6.3b market-cap company announced a latest loss of US$129m on 31 December 2024 for its most recent financial year result. Many investors are wondering about the rate at which Upstart Holdings will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Upstart Holdings

Upstart Holdings is bordering on breakeven, according to the 13 American Consumer Finance analysts. They expect the company to post a final loss in 2024, before turning a profit of US$2.0m in 2025. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 108%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Upstart Holdings given that this is a high-level summary, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Upstart Holdings currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Upstart Holdings, so if you are interested in understanding the company at a deeper level, take a look at Upstart Holdings' company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Valuation: What is Upstart Holdings worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Upstart Holdings is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Upstart Holdings’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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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.