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Upstart Stock Trades at Premium Value: Should You Buy, Hold or Sell?
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Key Takeaways
UPST trades at a higher P/S multiple than industry peers, even as its shares lag the broader market.
UPST posted 71% revenue growth in Q3 as loan demand surged, despite tighter AI-driven approval rates.
UPST is expanding beyond personal loans, with auto, home and small-dollar lending gaining traction.
Upstart Holdings (UPST - Free Report) shares are trading at a premium, as suggested by the Value Score of D. In terms of the forward 12-month Price/Sales (P/S), Upstart is trading at 3.83X, higher than the Zacks Financial – Miscellaneous Services industry average of 3.36X.
UPST is also trading at a premium compared to its fintech rivals, LendingClub (LC - Free Report) and Enova International (ENVA - Free Report) . At present, LC and ENVA have P/S multiples of 1.95X and 1.08X, respectively.
Image Source: Zacks Investment Research
Despite a premium valuation, Upstart’s shares have underperformed. Its shares have declined 31.1% over the past three months, compared to the industry’s 14% fall, while the S&P 500 composite increased 3.3%. Comparatively, its peers, LendingClub and Enova International, put up a better performance in terms of share price during this period.
Investors’ confidence continues to erode amid macroeconomic conditions, including the shifts in interest rates. The drop also reflects concerns about Upstart’s lending models becoming more conservative during parts of the third quarter, temporarily limiting approval rates. The decline has raised questions about whether this is another temporary stumble or a sign of deeper trouble in the credit landscape.
Image Source: Zacks Investment Research
Let’s delve deeper into this to find out whether the stock should be a Buy, Hold or Sell.
UPST’s AI Advantage & Quarter Growth
Upstart achieved decent progress on its plan of rapid growth, profitability and AI leadership. According to the company, its AI platform is performing as designed, adapting to evolving macro signals while delivering solid results.
Consumer demand remained robust, with loan applications jumping about 30% quarter over quarter to more than 2 million, the highest in more than three years. However, a more conservative model pushed the conversion rate down to 20.6% from 23.9% last quarter, though still above 16.3% a year ago. The decline stemmed from UPST's AI-driven risk models tightening approvals and raising interest rates, responding to elevated macro signals.
However, despite this, Upstart posted a stellar third-quarter 2025 performance, with revenues surging 71% year over year to $277 million and loan originations climbing 80% to $2.9 billion.
Upstart’s automation advantage remains significant, with 91% of loans in the third quarter of 2025 being fully automated, requiring no human intervention. This operational efficiency supports scalability and enables lenders to approve more loans to borrowers, faster and often at lower interest rates.
Beyond automated loans, Upstart launched a machine learning model to optimize take rates. Over time, this framework will unlock significant improvements in its ability to monetize model wins that benefit borrowers.
Gaining Momentum in New Lending Verticals
While personal loans remain the backbone of Upstart’s business, the company’s auto, home and small-dollar loans segments are gaining momentum. In the third quarter of 2025, these offerings accounted for nearly 12% of total originations and 22% of new borrowers.
Auto retail loan originations grew 9% sequentially. Home-equity lending also picked up, with automatic home loan approvals surging to about 20% by October 2025, up from under 1% in June. Small-dollar relief loans advanced rapidly, too, with qualified borrowers now receiving funds in about 90 seconds. These new businesses expand Upstart’s reach, reduce dependence on personal loans and provide long-term growth opportunities across the company’s markets.
What are the Negative Scenarios?
Despite maintaining solid operational momentum, several concerns persist. The market remains cautious about model volatility, notably the rapid tightening of approvals. Although management pointed to calibration upgrades initiated in the third quarter of 2025 to reduce month-to-month conversion volatility by about 50%, investors await proof of consistency.
Upstart is also carrying a larger-than-normal loan balance as it transitions new products off its books, and any delay in securing partner deals could prolong this transition. At the same time, even though the broader credit environment appears to be improving, lingering uncertainty around repayment speeds and interest-rate conditions could impact loan performance and investor demand.
Upstart’s stock remains highly responsive to macroeconomic conditions — especially shifts in interest rates — adding an additional layer of volatility on top of its core business fundamentals.
UPST’s Estimate Revision
The Zacks Consensus Estimate for 2025 earnings per share (EPS) has moved up by 2 cents to $1.68 over the past 60 days. However, the consensus mark for 2026 EPS has been revised 27 cents downward to $2.65, over the same time frame.
The Zacks Consensus Estimate for 2025 EPS suggests a significant growth from the prior-year quarter, while that for 2026 EPS projects 57.7% growth.
Image Source: Zacks Investment Research
How to Play the UPST Stock?
UPST’s AI-driven model conservatism and ongoing macro sensitivity show caution. Premium valuation is also justified, considering its strong earnings growth prospects and solid fundamentals. Upstart’s three-month slide contrasts sharply with its strong third-quarter execution. The company’s strong revenues, profitability and continued expansion into new lending categories suggest that it is far better positioned today.
While the sell-off has created an attractive entry point for long-term investors, caution is warranted. For now, Upstart looks best suited as a hold, a stock worth watching closely rather than rushing to buy or sell amid short-term market turbulence.
Image: Bigstock
Upstart Stock Trades at Premium Value: Should You Buy, Hold or Sell?
Key Takeaways
Upstart Holdings (UPST - Free Report) shares are trading at a premium, as suggested by the Value Score of D. In terms of the forward 12-month Price/Sales (P/S), Upstart is trading at 3.83X, higher than the Zacks Financial – Miscellaneous Services industry average of 3.36X.
UPST is also trading at a premium compared to its fintech rivals, LendingClub (LC - Free Report) and Enova International (ENVA - Free Report) . At present, LC and ENVA have P/S multiples of 1.95X and 1.08X, respectively.
Image Source: Zacks Investment Research
Despite a premium valuation, Upstart’s shares have underperformed. Its shares have declined 31.1% over the past three months, compared to the industry’s 14% fall, while the S&P 500 composite increased 3.3%. Comparatively, its peers, LendingClub and Enova International, put up a better performance in terms of share price during this period.
Investors’ confidence continues to erode amid macroeconomic conditions, including the shifts in interest rates. The drop also reflects concerns about Upstart’s lending models becoming more conservative during parts of the third quarter, temporarily limiting approval rates. The decline has raised questions about whether this is another temporary stumble or a sign of deeper trouble in the credit landscape.
Image Source: Zacks Investment Research
Let’s delve deeper into this to find out whether the stock should be a Buy, Hold or Sell.
UPST’s AI Advantage & Quarter Growth
Upstart achieved decent progress on its plan of rapid growth, profitability and AI leadership. According to the company, its AI platform is performing as designed, adapting to evolving macro signals while delivering solid results.
Consumer demand remained robust, with loan applications jumping about 30% quarter over quarter to more than 2 million, the highest in more than three years. However, a more conservative model pushed the conversion rate down to 20.6% from 23.9% last quarter, though still above 16.3% a year ago. The decline stemmed from UPST's AI-driven risk models tightening approvals and raising interest rates, responding to elevated macro signals.
However, despite this, Upstart posted a stellar third-quarter 2025 performance, with revenues surging 71% year over year to $277 million and loan originations climbing 80% to $2.9 billion.
Upstart’s automation advantage remains significant, with 91% of loans in the third quarter of 2025 being fully automated, requiring no human intervention. This operational efficiency supports scalability and enables lenders to approve more loans to borrowers, faster and often at lower interest rates.
Beyond automated loans, Upstart launched a machine learning model to optimize take rates. Over time, this framework will unlock significant improvements in its ability to monetize model wins that benefit borrowers.
Gaining Momentum in New Lending Verticals
While personal loans remain the backbone of Upstart’s business, the company’s auto, home and small-dollar loans segments are gaining momentum. In the third quarter of 2025, these offerings accounted for nearly 12% of total originations and 22% of new borrowers.
Auto retail loan originations grew 9% sequentially. Home-equity lending also picked up, with automatic home loan approvals surging to about 20% by October 2025, up from under 1% in June. Small-dollar relief loans advanced rapidly, too, with qualified borrowers now receiving funds in about 90 seconds. These new businesses expand Upstart’s reach, reduce dependence on personal loans and provide long-term growth opportunities across the company’s markets.
What are the Negative Scenarios?
Despite maintaining solid operational momentum, several concerns persist. The market remains cautious about model volatility, notably the rapid tightening of approvals. Although management pointed to calibration upgrades initiated in the third quarter of 2025 to reduce month-to-month conversion volatility by about 50%, investors await proof of consistency.
Upstart is also carrying a larger-than-normal loan balance as it transitions new products off its books, and any delay in securing partner deals could prolong this transition. At the same time, even though the broader credit environment appears to be improving, lingering uncertainty around repayment speeds and interest-rate conditions could impact loan performance and investor demand.
Upstart’s stock remains highly responsive to macroeconomic conditions — especially shifts in interest rates — adding an additional layer of volatility on top of its core business fundamentals.
UPST’s Estimate Revision
The Zacks Consensus Estimate for 2025 earnings per share (EPS) has moved up by 2 cents to $1.68 over the past 60 days. However, the consensus mark for 2026 EPS has been revised 27 cents downward to $2.65, over the same time frame.
The Zacks Consensus Estimate for 2025 EPS suggests a significant growth from the prior-year quarter, while that for 2026 EPS projects 57.7% growth.
Image Source: Zacks Investment Research
How to Play the UPST Stock?
UPST’s AI-driven model conservatism and ongoing macro sensitivity show caution. Premium valuation is also justified, considering its strong earnings growth prospects and solid fundamentals. Upstart’s three-month slide contrasts sharply with its strong third-quarter execution. The company’s strong revenues, profitability and continued expansion into new lending categories suggest that it is far better positioned today.
While the sell-off has created an attractive entry point for long-term investors, caution is warranted. For now, Upstart looks best suited as a hold, a stock worth watching closely rather than rushing to buy or sell amid short-term market turbulence.
Currently, Upstart carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.