r/wallstreetbets
UPST May Be On Its Last Leg
Upstart is unlikely to repeat its 2020-2021 gains due to higher rates, inflation, and low chances of getting a bank charter.
- High inflation and rising interest rates increase borrowing costs and delinquency rates for their clients.
- The company needs a bank charter to turn things around, but approval is unlikely due to critical weaknesses.
- The macroeconomic environment strains borrowers' ability to repay loans, limiting future growth.
TL;DR: it seems unlikely that Upstart will experience the glorious stock gains in 2020-2021 since those same rich conditions will not be repeated. Also, it appears they may be in trouble and need a bank charter to turn things around. The bank charter approval hinges on very crucial points where they are weak and so they will be unlikely to get an approval. The war is a catalyst causing more problems for Upstart. Inflation will rise and increase costs for their borrowers, which eats in to their ability to make repayments. The Fed will be forced to maintain or hike rates increasing critical strain on their borrowers and increasing delinquency rates.
The backdrop in 2020-2021: the Federal Funds Rate (FFR) was between 0% - 0.25% and the minimum reserve requirement ratio was 0. This caused the insane spike you see in M1 during that time period (because borrowing was virtually free and banks wanted to make as much money as possible). This also caused a bottleneck for everyday people like you and me who wanted loans. The traditional lending system was not created for this event. Rather, it was created for normal economic conditions. However, 2020-2021 was not a normal time period. It called for unconventional methods. Cue Upstart.
Upstart, as stated on its website, "aim\[s\] to radically reduce the cost and complexity of borrowing for all Americans by using our proprietary AI models to remake the entire lending process."
Reduce the complexity of borrowing.
That's exactly what it did during that time. It simplified the process and it captured market share in the lending space. There was an insatiable demand for loans and the old system could not simply process these loans fast enough. As a result, Upstart was able to capitalize on this inefficiency.
Q1 2021 - Q4 2021 saw unspeakable growth. Revenue grew 1,018% in Q2 2021 which saw an Adjusted EPS of $0.62. The revenue kept climbing and they kept beating Wall Street. Then, we started a new year with 2022 and the music stopped. Russia invaded Ukraine and we had an inflation problem. We were hiking the Federal Funds Rate and so down went Upstart.
Throughout 2022 - 2024, Upstart's revenues fluctuated, and their losses seemed somewhat minimal. Then, enter 2025, positive EPS and consistent revenue seeing the stock price rise up into the \~$80s. The effect of their stock price was compunded by the fall in inflation (though still elevated). Then, out of nowhere, we saw a sudden drop in stock price. Loans on the balance sheet. Sure, that's the reason the stock sold off. The truth is, the revenue is weak and they can barely hold on to the cash they earn. I guarantee you this isn't going to stop.
Their margins are razor thin no matter how much they earn in either rich conditions or poor. In 2021, their peak EPS was $0.61 with revenue at $305M. In the latest report Q1 2026, they had negative EPS of $0.08 with revenue at $308M. Upstart is no longer a "new" company anymore.
They have been in existence since 2012 and trading on the exchange for \~5 years now. Any revenue or EPS they report has to be 10X better for it to have any effect on the lay investor or speculator. I guarantee you, they will never achieve these numbers. However, they have a hail mary.
The Bank Charter.
If approved, they'll able to have access to deposit funding. They're currently backed by Private Credit partners. That's right, private credit. The one with the bubble at the moment. This could save them maybe 4-5%-improving bottom line. It reduces their regulatory complexity due to different states having different lending laws, rate caps, and licensing requirements. The charter bypasses these things. About 18 banking charter apps were filed in 2026. Nubank was approved within 4 months of applying.
If not approved, they're stuck with private credit concentration which doesn't help them one bit and keeps them stuck where they are. Ultimately, it will be their demise.
The bank charter is no guarantee and it's really their last hope. I imagine they won't get the approval.
The active Securities Fraud Class Action. The OCC, FDIC, and Federal Reserve conduct a character assessement and fitness review of each applicant. The pending Class Action stating Upstart made materially false and misleading statemetns about their AI model's accuracy will be flagged. Regulators don't approve banks run by management teams under active fraud litigation. The June 8, 2026 lead plaintiff deadline is coming up. This will make the case more formal and visible, which is happening right as the OCC is reviewing the application.
The profitability requirements for de novo banks. The OCC requires de novo banks demonstrate a credible path to sustained profitability (typically within 3 years). Upstart only returned to GAAP profitability in Q2 2025. Looking at the full earnings history, you can see Upstart is a loser. This will make their capital adequacy and business model highly questionable.
Upstart's application requires 3 regulators. Nubank applied to the OCC and FDIC only. The Federal Reserve wasn't a part of their applications. 3 different regulators and Upstart has no visible White House connection.
This is a favorable regulatory environment. Just look to the One Big Beautiful Bill. The administration seems to be a fan of less regulation. This is a now-or-never moment for Upstart. If they can't get the approval, they'll have to reapply. That can take up to 12-24 months. A new administration can change things and, by the looks of it, we might get one come 2028.
The war. It really is just a catalyst for Upstart's demise. It causes critical financial strain on their near-prime borrowers. Inflation up, jobs that fund these borrowers are down, and delinquncies can start to rise.
Let's face it, it's hard to say the war is ending anytime soon. The administration isn't fabricating chaos they can control. This is not in their hands unless they decide to nuke Iran (which won't happen). The Iranian Regime is a martyr government and doesn't need to win. They just need to cause bottlenecks or small disturbances in the SoH to disrupt shipping, which will increase inflation and force the Fed to hike rates or, at the very least, remain paused as a result. With the little tech the IRGC has, they seem to be very effective at doing that. Given the administration doesn't want to back down and neither the IRGC, this will be going on for a while. Let's say it ends tomorrow. Do you know how much of this we have to reverse? The economy isn't going to suddenly get better. As a result, the near prime borrowers won't either.
I've followed UPST for a long time now. It had a good run.
https://preview.redd.it/9xdpjgl7ib6h1.jpg?width=1170&format=pjpg&auto=webp&s=f8ba3a00f15d2edcc02023ea0c0f7cfa4d7443e2
The market only care about Cocaine, Data Centers, Space shit and Semiconductors.....the other things are useless
Are you shorting or buying
He is inversing himself... Calls but bear?
I had calls, but, once this hits about 40 (because I can see it rise), I'm going to enter with OTM puts.
So your gonna dump the calls at 40?
I'm also holding a bunch of calls but am seeing the opposite... With current macro/inflation/rate hikes see it retracing down to 25/26 then bouncing on next earnings up to 50 tbh lol.
I noticed in the last couple of weeks it's held up really well compared to a lot of the market.
Will have to research a bit more what you said here. My bull thesis was focused around rate cuts which are off the table now.
Still their revenue growth has been very strong last 18 months (I first bought in with shares around 14 dollars a few years back and the financials have come on leaps and bounds since then).
Also the recent insider buying is really positive. It's not small amounts as well but significant buys.... Idk could be bs/smoke screen.
Interesting stock regardless.
Basically. I need to recapture some value.
How do you see it hitting $50? With the hype on other AI related stocks, moves to defensives, and flows to bonds, where does the capital come from and how?
I agree that it appears resilient at this time, but, with the trajectory of the Fed and what appears to be the miscalculation of this administration, reality is going to set in for whoever is holding.
Given rising \[supply side\] oil prices and higher CPI, why would it make sense to cut rates? Inflation 2% and full employment is the goal. I mean BLS numbers are showing we're somewhat okay, but inflation is not. I imagine Kevin Warsh (though seemingly an Administration plant) will hike or keep rates the same. If we let inflation runaway, we're in deeper trouble.
Just a quick note if you don't use it: the Fedwatch tool is typically precise with what the Fed does as well if you need a resource to determine what happens next.
Moving forward, I don't see investors seeing any significant value in UPST frankly to justify a higher stock price. Even if revenue is strong for what they are, it's not satisfactory. What really matters is their bottom line. They'll need to 5x or 10x their bottom line.
The insider buying can be wrong too. They've also declared sales recently so it's trivial in my opinion. Unless they are buying swaths of stock, it just looks like they're making an attempt.
Just a thought: I think it's interesting when you're in it. However, when I take a 10x zoom out, it's more risky than it is rewarding. Risky as in the variables of success are very hard to control to protect principal while equally capturing signficant gains.
For instance, if we compare MU to UPST, MU would be interesting, no?
What the actual fuck, I went balls deep into UPST based on a different post here about 3 weeks ago, how am I supposed to profit from blind faith with this kind of shit upsetting the apple cart?
damn this is some serious dd but i think you're being too generous with that "last leg" title - feels more like they're already flatlined
the bank charter thing is interesting but you're right about the class action being a massive red flag for regulators. no way they approve someone with active fraud litigation, especially when there's easier approvals out there
also wild how they managed to have basically same revenue in 2026 as 2021 but went from profitable to bleeding money. that's not a growth story anymore, that's just survival mode
Upstart, what do they do?
I can't hear you. You're breaking up
You forget the black swan case of the SpaceX IPO drops like a dookie on the NASDAQ, mopping up retail liquidity, then tanking, taking the market and the economy with it. Warsh is forced to cut rates, but layoffs abound, and now people are desperate and turning to UPST as a last ditch play to get liquidity to throw back into 0DTE calls on $SPY.
Long 1/26/27 UPST $100C
u/TargetBan made a pro UPST post, I want to know your thoughts.
Something to consider: SoFi had a run last year while UPST was going down.
Your opinion, which you've been posting across different communities, is laid out pretty clearly, but I think it's very debatable.
What stands out to me is that you're mostly focusing on the arguments against UPST while either dismissing or ignoring some of the stronger arguments in its favor. That makes the analysis feel somewhat one-sided.
For example, you seem to assume that UPST won't get a de novo bank license. Maybe that's right, maybe it's not, but I don't think that's anywhere close to a settled question. And if they do get one, you're significantly underestimating what lower funding costs could do for the business. That's one of their biggest headwinds today.
Just look at what happened with SoFi after getting its bank charter, or LendingClub. The improvement in margins was dramatic and completely changed the economics of the business. To me, a banking license looks like the natural next step for UPST and something that has probably been part of the long-term plan for years, not some last-ditch attempt to stay alive.
The only serious risk I see here is the macro environment. But that's always on the menu, and your analysis seems to lean heavily toward the worst-case scenario without giving much consideration to the upside case.
Upstart can eat a dick. Stupid ass Credit Karma always sends them information every time I take out any kind of loan. I never even apply with them. I get a rejection email the next day. 1-2 days after that I get a letter from Upstart telling me I've been pre-approved for a personal loan for some amount. Right in the trash.