Is UPST a good stock to buy? We came across a bullish thesis on Upstart Holdings, Inc. on KUANYU LEE’s Substack. In this article, we will summarize the bulls’ thesis on UPST. Upstart Holdings, Inc.’s share was trading at $34.86 as of April 20th. UPST’s trailing and forward P/E were 76.82 and 35.97 respectively according to Yahoo Finance.
Upstart Holdings, Inc., together with its subsidiaries, operates a cloud-based artificial intelligence (AI) lending platform in the United States. UPST is currently trading near $25, close to its 52-week low, after a year-to-date decline of roughly 44.7%, reflecting extreme market pessimism around its growth prospects and business model sustainability. Despite this, the company has demonstrated strong operational progress, with FY2025 revenue reaching $1 billion—a 64% increase from 2024—and adjusted EBITDA of $230 million, translating into a 22% margin and its first full-year GAAP net profit of $53.6 million.
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Management’s guidance for 2026 targets $1.4 billion in revenue with a 21% EBITDA margin, alongside a long-term goal of 35% CAGR and 25% end-market profit margins through 2028, highlighting durable growth potential. Valuation analysis, incorporating discounted cash flow, comparable companies, and historical EV/Revenue multiples, implies a baseline fair value of $44–$48 per share, suggesting the stock is undervalued by approximately 55–92% relative to its current market price. Even under conservative assumptions with a higher WACC and lower terminal multiple, the market is already pricing in extreme downside risk.
UPST’s EV/FY2025A revenue multiple of 2.4× remains materially below peer averages and its own historical 7× level, signaling substantial room for recovery if market confidence is restored. Key risks include ongoing legal investigations, high stock-based compensation affecting free cash flow, CEO transition, and elevated share price volatility (beta 2.44).
While this is not a low-risk investment, UPST offers a high-beta, high-growth opportunity with meaningful upside potential, particularly as upcoming catalysts, including the Q1 2026 earnings report and new CEO’s first call, may influence market perception and drive revaluation.
Previously, we covered a bullish thesis on Upstart Holdings, Inc. (UPST) by Unconventional Value in March 2025, which highlighted the company’s AI-driven credit platform, improvements in risk assessment models, and growth potential despite macroeconomic headwinds. UPST’s stock price has depreciated by approximately 37.16% since our coverage due to the stock’s high risk profile. KUANYU LEE shares a similar view but emphasizes FY2025 operational progress, undervaluation versus peers and historical multiples, and upside potential from upcoming catalysts and management guidance.
Upstart Holdings, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held UPST at the end of the fourth quarter which was 37 in the previous quarter. While we acknowledge the risk and potential of UPST as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UPST and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
