Upstart Holdings (UPST) just grabbed headlines with a two-part announcement that could reshape the company’s growth trajectory. First, ABNB Federal Credit Union revealed it has partnered with Upstart to offer personal loans, leveraging the company’s AI-powered lending platform. In addition, Upstart successfully completed a substantial $600 million convertible notes offering, adding new capital to fuel expansion and innovation. Together, these moves are poised to deepen Upstart’s presence in consumer lending and reinforce its balance sheet at a crucial time.

This combination of a new lending partner and a major capital raise appears to have caught the attention of investors. Upstart’s shares are up nearly 60% over the past year, with momentum accelerating as partnership announcements and greater financial flexibility reach the news. The past three months alone have seen a 44% jump, even after a recent dip last month. This activity suggests markets are responding favorably to both the growth narrative and the company’s reduced risk profile.

But with the stock’s run this year and new capital now in play, is Upstart Holdings trading at a bargain or are investors already factoring in future growth?

According to community narrative, Upstart Holdings is currently trading below its estimated fair value based on strong future growth projections and improving profitability. Analysts suggest an undervaluation of approximately 16%.

Improvements in underwriting, automation, and personalization enhance loan approval rates, lower costs, and reduce default risks. These changes positively impact revenue and net margins. Strategic HELOC growth, supported by strong banking relationships and an expanded borrower base, sets the stage for future revenue growth and earnings support.

Curious about what is fueling Wall Street’s optimism? Discover which breakthrough innovations and financial trends analysts believe could power rapid future growth for Upstart Holdings. There is more behind this valuation than meets the eye. Find out the headline assumptions that drive this bullish target.

Result: Fair Value of $81.69 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, persistent high default rates or sudden macroeconomic shocks could shift the outlook. This could introduce volatility for both future revenue and profit stability.

Find out about the key risks to this Upstart Holdings narrative.

While future growth prospects make Upstart look attractively undervalued, a different approach paints a less generous picture. Using market comparisons, the company appears pricey compared to industry averages. Could optimism be running ahead of reality?