Upstart: A Peculiar Calculation

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Four years have passed, and the shareholders of Upstart Holdings – a most curious enterprise – find themselves in a state not unlike that of a fly trapped in amber. The stock, you see, has remained stubbornly fixed, a monument to stagnation, since its brief, almost indecent, ascent from the year 2020. A growth spurt, they called it, fueled by the peculiar circumstances of a pandemic. But now? A stillness. A dreadful, unsettling stillness. The company has, in its own way, begun to stir, to regain some semblance of forward motion, but the market, it seems, is afflicted with a profound and inexplicable apathy.

One might venture to predict, with a degree of cautious optimism, that the year 2026 could prove to be the turning point. Though predictions, as any seasoned observer of human folly knows, are often little more than elaborate exercises in self-deception.

What, Precisely, Is Upstart?

The established order, the titans of credit assessment – Equifax, Experian, TransUnion – continue to ply their trade using methods as ancient and predictable as the changing of the seasons. They gather data, apply their formulas, and pronounce judgment. It works, of course. It has always worked. But Upstart, this upstart (the irony is not lost on me), proposes a different path. A more… intricate calculation.

They employ an artificial intelligence, a digital sorcerer, if you will, that considers not merely the usual suspects – income, debts, past transgressions – but over 2,500 variables. A veritable ocean of data! The algorithm seeks to discern the likelihood of repayment, to penetrate the murky depths of a borrower’s character. And the results, they claim, are… remarkable. Upstart’s model allows for 43% more loans to be approved, without a corresponding increase in defaults. A most peculiar feat, indeed. It is as if the algorithm possesses a secret knowledge, a subtle understanding of human nature that eludes the grasp of mere mortals.

Lenders, it appears, are beginning to take notice. Over one hundred banks, credit unions, and other financial institutions now rely on Upstart’s platform. And through the first three quarters of 2025, the company’s revenue has surged by nearly 80%. A most gratifying turn of events, lifting the enterprise from the abyss of losses and into the realm of profitability. The projections for the fourth quarter, and the analysts’ estimates for the coming year, suggest that this upward trajectory will continue, at least until 2027. One can only hope, of course, that unforeseen calamities do not intervene.

But why, then, does the stock remain so stubbornly immobile? It is a question that plagues the discerning investor. A riddle wrapped in a mystery, concealed within an enigma.

A Warning, and the Algorithm’s Peculiar Logic

The blame, it seems, lies with a recent pronouncement from the company itself. In early November, Upstart’s algorithm, in a fit of digital prescience, predicted an economic headwind. It tightened lending standards, and loan originations fell short of expectations. The market, predictably, panicked. It is, after all, a creature of habit and prone to fits of irrationality.

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However, two crucial details are being overlooked, obscured by the prevailing atmosphere of gloom. Details that will, in time, become impossible to ignore.

First, this is precisely how the algorithm is supposed to function. It is not a benevolent benefactor, dispensing loans with reckless abandon. It is a guardian, protecting lenders from potential losses. Its origination business may suffer in the short term, but the long-term value of its credit-scoring technology will, in the end, shine through, especially during times of economic hardship. It is a rather cold, calculating logic, but undeniably effective.

Second, despite the slowing growth, analysts still anticipate a per-share profit of $2.38 this year. The stock is currently trading at less than 20 times that figure – a bargain, by any reasonable standard, for a company still expanding at a respectable pace. It will simply take time for the market to recognize the true potential of Upstart, to shed the lingering effects of the recent lackluster earnings reports. By mid-year, investors should begin to appreciate that the company’s recent results have been understating its actual profit potential. It is a slow awakening, but an awakening nonetheless. And for the patient investor, a most promising sign.

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2026-01-29 10:33