Upstart(US:UPST) ZACKS·2025-10-30 16:45Core Insights - A growing number of credit unions are adopting Upstart Holdings' AI platform to modernize their lending operations, indicating increased confidence in Upstart's technology from community lenders [1][2] Company Performance - Upstart reported revenues of approximately $257 million in Q2 2025, more than double the previous year, with loan originations reaching about $2.8 billion, the highest in three years [3] - The company returned to GAAP profitability with a net income of $5.6 million, and contribution profit increased to $141 million, reflecting margin improvement and higher conversion rates [3] - Upstart's auto lending business grew more than sixfold in the past year, while its home segment grew nearly ninefold, now accounting for over 10% of total volume [4] Technological Advancements - Upstart's AI model "Model 22" improved risk-separation accuracy by 17 percentage points compared to traditional credit models, with 92% of loans in Q2 2025 being fully automated [4] Market Context - Despite strong performance metrics, Upstart's stock has faced challenges due to concerns over softer credit conditions and turbulence in the used-car lending market [5] - The bankruptcy of a subprime auto lender has raised questions about downstream credit risk, highlighting the sensitivity of Upstart's model to shifting credit-cycle dynamics [5] Peer Comparison - LendingClub Corporation reported a 37% year-over-year increase in loan originations to $2.6 billion and a 32% increase in total revenues to $266.2 million in Q3 2025 [6] - SoFi Technologies reported record net revenues of $961.6 million, up 38% year over year, with significant growth in members and products [7] Valuation Insights - Upstart shares are currently considered overvalued, trading at a forward Price/Sales ratio of 3.81X, above the industry average of 3.40X [10] - The Zacks Consensus Estimate for full-year 2025 and 2026 EPS has been revised marginally upward, indicating significant year-over-year increases [11]