Upstart Holdings (UPST) soared 30% on Wednesday after the artificial intelligence (AI) lending platform delivered fourth-quarter results that easily surpassed Wall Street expectations.
The company reported an adjusted profit of $0.26 per share, defying analysts’ predictions of a $0.03 loss. Revenue surged 56% year-over-year to $219 million, well above the $181.9 million forecasted.
Key drivers of the strong quarter included a significant increase in transaction revenue—up 68% to $2.11 billion—and a staggering 89% jump in loan originations, reaching 245,663 loans. CEO Dave Girouard credited Upstart’s AI-driven risk assessment models for the company’s ability to expand its loan marketplace despite macroeconomic uncertainties.
Guidance Fuels Investor Optimism
Upstart’s forward guidance only added to investor enthusiasm. The company expects revenue of $200 million for the first quarter of 2025, outpacing analysts’ estimates of $184.6 million. Even more striking, Upstart forecasts full-year revenue to reach $1 billion, far exceeding the $821.6 million anticipated by analysts. Management also indicated that the company expects to break even or better on a GAAP basis, a milestone it has not achieved since 2021.
J.P. Morgan analysts upgraded Upstart to Neutral from Underweight and raised their price target from $57 to $79, citing improved risk models and a stabilizing macroeconomic environment.
Expansion into Auto and Home Loans Presents Growth Opportunity
While personal loans remain Upstart’s primary business, the company has been expanding into auto loans and home equity lines of credit (HELOCs). These segments accounted for just 3% of Upstart’s volume in Q4 but showed robust quarter-over-quarter growth of 61% and 59%, respectively. Given the size of these markets—$677 billion for auto loans and $35 trillion in home equity—Upstart has significant room to scale its business beyond personal lending.
With AI-powered lending gaining traction and Upstart demonstrating strong financial momentum, the company appears well-positioned for continued expansion. As the fintech sector evolves, Upstart’s ability to leverage AI for credit assessment could make it a key player in the future of lending.
With AI-powered lending gaining traction and Upstart demonstrating strong financial momentum, the company appears well-positioned for continued expansion. As the fintech sector evolves, Upstart’s ability to leverage AI for credit assessment could make it a key player in the future of lending.
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