From Yahoo Finance · · 2m
Upstart at $2.5 billion: the misunderstood AI lender
A stock that fell 95% is growing 35% a year and turning a GAAP profit, and almost nobody is pricing it that way.
In brief
A stock that fell 95% is growing 35% a year and turning a GAAP profit, and almost nobody is pricing it that way. Upstart is growing 35% a year with GAAP profits at a price-to-sales ratio of about 2, so the gap between the business and the stock is the whole thesis. Originally reported by Yahoo Finance.
A six-year wild ride
Upstart went public at the end of 2020, then rode the bull market to triple-digit revenue growth and real profits on cheap money and stimulus.
Then rates rose
The 2022 rate surge broke the momentum. At its worst the stock had lost more than 95% of its value.
Priced like nothing happened since
Shares sit near $25, a market cap of just $2.5 billion, even though the business is now growing fast and profitable under GAAP. Investors mostly stopped watching.
The CEO names the gap
Paul Gu says Upstart has been through three or four cycles of investor misunderstanding, and admits the company could have been clearer about what it actually controls.
“I don't think you can find hardly any companies growing at that rate (that we are) that are profitable that trade at multiples anywhere in our neighborhood.”
Two versus ten
Upstart trades at roughly 2 times sales. A software company with the same growth would likely fetch at least 10.
The funding hole is plugged
After the 2022 liquidity crisis, committed partners like Castlelake and Fortress now guarantee funding for loans originated on the platform. A bank charter application is in progress.
The numbers right now
First half of 2026: revenue up 35% to $625 million, a $0.10 per share GAAP profit, and $117.4 million in adjusted EBITDA.
Personal loans fund the bets
The profitable core personal loans business pays for expansion into home and auto lending, both growing fast into far larger markets.
What a 10x needs
Management targets 35% annual growth through 2028 and a 25% EBITDA margin, roughly $2.6 billion in revenue. Hold that, catch falling rates, and the stock has room to run.
“A 10x gain is definitely a possibility.”
The takeaway
Upstart is growing 35% a year with GAAP profits at a price-to-sales ratio of about 2, so the gap between the business and the stock is the whole thesis.
