Upstart Holdings (UPST): Evaluating Valuation After Recent Share Price Rebound

Upstart Holdings (UPST) may not have made major headlines this week, but the stock’s recent moves have caught the eye of investors looking for signals in the lending technology space. Even without a headline-grabbing event, every uptick or downtick tends to spark debates about whether there is a deeper story, especially when it comes to growth-oriented fintech names in today’s market. Sometimes, even a quiet week can be a reason to step back and ask if the current price reflects the company’s true potential. Looking at the bigger picture, Upstart Holdings is coming off a year of dramatic swings, with its share price climbing an eye-popping 78% over the past year and gaining 10% year-to-date. Over the past month, momentum has started to return with a 5% increase after a quiet stretch. That is a sharp rebound compared to a dip earlier in the past week, showing that investor risk appetite for high-growth stories like Upstart is still alive and well. After such a volatile year and trading above where it started 2024, is Upstart Holdings undervalued, or has the market already priced in every bit of future growth?

Most Popular Narrative: 16.9% Undervalued

According to the most widely followed narrative, Upstart Holdings is currently considered undervalued, with its fair value estimated to be significantly above the current market price.

The implementation of Model 19, featuring the Payment Transition Model (PTM), has improved underwriting accuracy. This enhancement is likely to improve loan approval rates and reduce default risks, which could have a positive impact on revenue and net margins. 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 also has the potential to leverage its strong relationships with banks and credit unions for cost-effective funding.

Curious how a fintech’s evolving AI models and new loan products could send earnings and margins surging in the years ahead? The most popular narrative is betting on sustained acceleration. Which bold forecasting assumptions make this possible? Find out which projections are fueling the biggest fair value estimate yet.

Result: Fair Value of $80.85 (UNDERVALUED)

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

However, potential headwinds, such as persistent high default rates or inaccurate loan model predictions, could challenge Upstart’s bullish outlook moving forward.

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

Another View: Market-Based Valuation Raises Doubts

While analyst forecasts suggest Upstart is undervalued, a look at how the market is pricing the company tells a different story. By comparing it to industry norms, this approach finds Upstart looking expensive, not cheap. Could optimism already be built into the price?

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

Stay updated when valuation signals shift by adding Upstart Holdings to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Upstart Holdings Narrative

If you see the story playing out differently or want to follow your own research, you can craft a personal take in just 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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