Upstart Holdings (UPST): Assessing Valuation After ABNB Partnership and $600 Million Capital Raise

If you’ve been watching Upstart Holdings (UPST) lately, you already know the stock is on the move, and for good reason. The company just inked a significant partnership with ABNB Federal Credit Union, expanding its distribution of personal loans on the Upstart Referral Network and potentially boosting origination volumes. Add in a newly completed $600 million convertible note offering, and it is clear Upstart is taking steps to strengthen both its balance sheet and growth prospects. For investors, these moves could mark a turning point in the company's story.

These recent developments come after a year marked by swings in sentiment for Upstart Holdings. The stock has leapt nearly 60% over the past year, with a remarkable 44% surge in the past three months alone, suggesting renewed optimism around the business. While shorter-term momentum has picked up, the last month was choppier, as investors weighed new partnerships against questions about financial sustainability. Still, Upstart’s double-digit annual revenue growth and dramatic improvement in net income hint at a business that is evolving quickly.

The question now, as the stock charges ahead, is whether markets are properly valuing Upstart’s upside or if there is still a buying opportunity for those willing to take on the risk.

Most Popular Narrative: 15.7% Undervalued

According to community narrative, Upstart Holdings is viewed as undervalued by about 16 percent against analyst fair value. This bullish view is supported by high expectations for both earnings and revenue growth, driven by improvements in underwriting and business expansion.

"Upstart's HELOC product growth, driven by conversion improvements, cross-selling, and state expansion, positions it well for future revenue growth and margins. The company may leverage its strong relationships with banks and credit unions for cost-effective funding. Improvements in small dollar relief loans, including reduced origination costs, have expanded Upstart's borrower base and are expected to contribute to revenue growth. Additionally, the integration of small dollar repayment data will enhance the accuracy of underwriting models."

If you think Upstart’s valuation rests on shaky hype, it may be worth a closer look. The community narrative is focused on a transformation fueled by rapid growth in both revenue and margins, with ambitious future profitability projections influencing its fair value. The main question remains: will these aggressive assumptions play out as anticipated, and are analysts forecasting a period of renewal or overreaching into riskier expectations? Examine the financial factors driving this notable price target.

Result: Fair Value of $81.69 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, periods of high loan defaults or shifts in macroeconomic factors could quickly challenge even the most optimistic growth story for Upstart.

Find out about the key risks to this Upstart Holdings narrative.

Another View: Multiples Suggest a Different Story

While analyst forecasts and fair value models see upside for Upstart, the market's pricing tells a different tale. Based on sales ratios, the stock appears more expensive than the broader industry average. Which method should investors trust?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Upstart Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Upstart Holdings Narrative

If you see the story differently or want to dig into the numbers on your own terms, you can put together your own take in just a few minutes, do it your way.

A great starting point for your Upstart Holdings research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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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.

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