68% Gap Opens Between Upstart (UPST) Price and Wall Street Targets After Earnings Selloff

Core Insights - Upstart (UPST) experienced a significant stock decline of 19.77% in one week, despite beating revenue estimates and returning to profitability after a $129 million loss in 2024 [1] - Analysts project a 68% upside for Upstart, with a target price of $51.67, based on a 35% growth target through 2028 [1] Financial Performance - Upstart reported Q4 revenue of $296.09 million, surpassing the consensus estimate of $294.45 million [1] - Full-year revenue increased by 64% to over $1 billion, with loan originations surging by 86% [1] - The company returned to profitability with a net income of $53.6 million for 2025, following a loss of $129 million in 2024 [1] Leadership and Guidance Changes - Co-founder Paul Gu will replace the current CEO on May 1, 2026, which has raised concerns among investors [1] - The company is shifting from quarterly guidance to annual targets, aiming for long-term execution rather than short-term forecasting [1] - Weaker-than-expected margin guidance for 2026 was provided, attributed to a shift towards secured products like auto and home loans [1] Analyst Sentiment - The consensus price target of $51.67 indicates a bullish outlook from analysts, with ratings including 3 Strong Buys, 5 Buys, 6 Holds, and 2 Sells from 16 analysts [1] - Goldman Sachs upgraded its rating from Sell to Neutral, acknowledging a more balanced risk-reward profile [1] Market Context - Upstart's stock has dropped 33.95% over the past month, while the broader market has remained relatively stable [1] - The stock is currently trading at 68 times trailing earnings, reflecting market skepticism about near-term profitability [1] Future Considerations - Investors will focus on the new CEO's ability to meet the 35% growth target and whether margin compression is temporary [2] - The leadership transition and shift to annual guidance introduce execution uncertainty that the market will closely monitor [1]