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3 Reasons to Buy Upstart Stock Like There's No Tomorrow

Wesley ParkMonday, Feb 17, 2025 6:26 am ET
3min read


Upstart Holdings (UPST) has been making waves in the lending industry with its innovative use of artificial intelligence (AI) and machine learning to improve access to affordable credit while reducing risk and costs for lenders. Despite the company's high valuation and market volatility, there are several compelling reasons to consider buying UPST stock. Here are three reasons to buy Upstart stock like there's no tomorrow:

1. AI-driven Underwriting Model:
Upstart's AI-driven underwriting model is a game-changer in the lending industry. By analyzing thousands of variables, including non-traditional data points like education, job history, and utility payments, Upstart can make more accurate risk assessments than traditional, credit-score based models. This allows Upstart to approve borrowers who might have been overlooked by traditional lenders, expanding its potential customer base and driving growth.


2. Expansion into New Loan Types:
While Upstart is primarily a personal loan platform, it has been expanding into auto loans and home equity lines of credit (HELOCs). In Q4 2024, Upstart originated $43 million in auto loans and $27 million in HELOCs, representing just over 3% of its total volume combined. However, these volumes grew sequentially by 61% and 59%, respectively. The auto loan market represents a $677 billion opportunity, more than four times the size of the personal loan market, while homeowners are sitting on about $35 trillion in home equity, presenting a massive opportunity in HELOC lending. If Upstart can continue to scale rapidly in these areas, its loan volume could multiply several times from here, driving significant revenue growth.
UPST
Name
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Net Loans YoY%
UpstartUPST
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3. Strong Financial Performance and Growth Trajectory:
Upstart has consistently reported strong financial results, even in a challenging lending environment. In Q4 2024, Upstart's revenue increased by 56% year over year and 35% sequentially, while its conversion rate (percentage of applicants who get a loan) increased from 11.6% a year ago to 19.3%. Additionally, Upstart's profitability improved dramatically, with an adjusted net margin of nearly 14%. The company's guidance for 2025 includes an adjusted EBITDA margin of 18% and being "at least breakeven" on a GAAP net income basis. As Upstart continues to grow its loan volume and improve its underwriting model, it can expect to see further improvements in profitability.


In conclusion, Upstart's AI-driven underwriting model, expansion into new loan types, and strong financial performance make it an attractive investment opportunity. Despite the company's high valuation and market volatility, the potential for significant growth and improved profitability make UPST stock a compelling choice for long-term investors. As always, it is essential to conduct thorough research and consider your risk tolerance before making any investment decisions.
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DanielBeuthner
02/17
Market's volatile, but UPST's underwriting is next level. Betting on innovation over traditional methods.
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MysteryMan526
02/17
@DanielBeuthner Do you think UPST can maintain its growth?
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Jelopuddinpop
02/17
Holding $UPST long-term. Potential for solid returns
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rvnmsn
02/17
@Jelopuddinpop How long you holding UPST? Curious about your target exit strategy.
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Airmang74
02/17
Risk assessment revolution. Borrowers benefit, lenders reduce risk. Win-win. What's not to like?
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BURBEYP
02/17
Market volatility might shake $UPST. Brace for dips.
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Harpnut
02/17
HELOCs are a goldmine. $35 trillion in home equity? UPST's potential is mind-blowing.
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NRG1788
02/17
UPSTart's expansion into auto loans and HELOCs is like a cheat code for growth. The numbers are mind-blowing.
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Orion_MacGregor
02/17
AI underwriting is the future. UPST is carving a niche where innovation meets profit. Big opportunity in alternative credit scoring.
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VirtualLife76
02/17
Holding UPST long-term. Potential for massive growth in auto and HELOCs. Diversifying my portfolio.
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Keroro999
02/17
AI underwriting = game changer for $UPST. 🚀
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careyectr
02/17
$UPST expanding fast. New loan types mean huge market share potential. Not just a personal loan player anymore.
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yeahyoubored
02/17
AI is the future, folks. UPST is riding that wave. High risk, high reward. 🚀
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skarupp
02/17
@yeahyoubored What's your target entry point?
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fgd12350
02/17
@yeahyoubored Totally agree, AI is lit.
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SeabeeSW3
02/17
Diversifying loans could moon $UPST. Keep eyes peeled.
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fmaz008
02/17
Market opportunity in auto loans is massive. UPST's growth trajectory looks promising. Long-term hold for me.
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user74729582
02/17
@fmaz008 How long you planning to hold UPST? Curious if you're thinking years or just riding the trend.
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HotAspect8894
02/17
@fmaz008 I had UPST, sold too early man... regret not holding when the market got volatile. FOMO hits hard sometimes.
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bottlethecat
02/17
Strong earnings, improving margins. 14% adjusted net margin is solid. Keep an eye on that EBITDA guidance.
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_hiddenscout
02/17
Strong growth, but valuation's a concern. Risky play
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