Upstart Holdings (UPST): Evaluating the Company’s Valuation in Light of Strong Q2 Results and 2025 Profitability Forecast

Upstart Holdings (UPST) just posted stronger fundamentals than many expected, with solid second-quarter results and an early return to GAAP profitability for 2025. The company's push into auto and home loans, building on its AI-driven lending platform, is also gaining attention among investors who are navigating a challenging credit environment.

See our latest analysis for Upstart Holdings.

While Upstart’s fundamentals have brightened, its share price has swung notably. The stock dropped 33% over the past three months as nervousness around credit quality lingered, despite the company’s operational rebound. Still, investors who held over the long term have seen an impressive 114% total shareholder return in three years, even though the one-year total return stands at -8%.

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With the fundamentals clearly improving and shares now trading nearly 43 percent below their analyst price target, the question is whether Upstart is undervalued or if the market already reflects all its growth potential. Could this be a buying opportunity, or is future upside already priced in?

Most Popular Narrative: 37.6% Undervalued

Upstart Holdings’ most widely followed narrative prices the stock at a fair value of $79.54. This is significantly higher than the latest close of $49.60, highlighting a notable gap between current trading levels and future earnings expectations.

Improvements in underwriting, automation, and personalization enhance loan approval rates, lower costs, and reduce default risks. These factors positively impact revenue and net margins. Strategic HELOC growth, supported by strong banking relationships and an expanded borrower base, sets the stage for future revenue growth and earnings support.

Read the complete narrative.

Want to know the secret behind this bullish price target? The narrative relies heavily on bold profit margin expansion and an ambitious trajectory for both revenue and EPS. Curious what projections justify such an optimistic valuation? Click through to see what’s driving this growth story.

Result: Fair Value of $79.54 (UNDERVALUED)

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

However, persistent high default rates or any slip in model accuracy could quickly undermine Upstart’s growth and challenge this optimistic outlook.

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

Another View: Challenging the Optimistic Outlook

Looking through the lens of market multiples, Upstart commands a price-to-sales ratio of 5.4x, making it considerably more expensive than its industry peers at 1.4x and also above its own fair ratio of 4.6x. This pricing suggests investors are betting big on future growth, but it also means there is less room for disappointment if targets are missed. Is this premium a sign of strong confidence, or does it leave little margin for error?

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

Build Your Own Upstart Holdings Narrative

If you want to test your insights or dig deeper into Upstart's story, you can assemble your own perspective in just a few minutes with 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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