Upstart: A Twenty-Five Year Speculation

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The financial world, usually a bastion of glacial progress, finds itself, rather belatedly, captivated by the digital sorcery of Artificial Intelligence. Upstart, a concern presently trading with a volatility that would give a seasoned gambler pause, fancies itself at the vanguard. It purports to assess creditworthiness with a sophistication previously reserved for the more discerning pawnbrokers, analyzing some 2,500 variables with algorithmic zeal. One suspects, however, that a competent bank manager, with a lifetime spent judging character, could achieve a similar result with a glass of sherry and a shrewd glance.

The shares, naturally, have been subject to the usual manic fluctuations. Down 88% from its peak – a precipitous fall, even by the standards of this speculative age – yet somehow managing a 144% surge over the last three years, despite a recent dip. A performance that suggests either genius or sheer luck, and one is never quite certain which. The question, of course, is whether a modest investment today might, in a quarter of a century, blossom into a sum large enough to warrant a small island in the Aegean.

A Calculation of Hopeful Folly

To transform ten thousand dollars into a million requires, as the actuaries will confirm, a compound annual growth rate of 20% over twenty-five years. A handsome return, certainly. Double the historical average of the S&P 500, which, one imagines, has been accumulating wealth with the relentless efficiency of a particularly well-managed anthill. Such a performance would be, shall we say, desirable. It would, however, necessitate a degree of sustained brilliance that is rarely encountered outside the pages of a particularly optimistic prospectus.

Recent Performance: A Fleeting Bloom?

Upstart reports a revenue increase of 71% year-on-year in the third quarter of 2025, propelled by a surge in transaction volume. Encouraging, undoubtedly. They are, moreover, venturing beyond personal loans into the realms of auto finance and HELOCs, where they appear to be gaining traction. One trusts, however, that this expansion is not predicated on the same reckless optimism that has undone so many ventures before it. The company forecasts net income of fifty million dollars for the year, having, commendably, maintained some degree of fiscal restraint. A rare quality in these times.

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The Uncertain Horizon

Upstart operates in a market measured in trillions, a figure that is, frankly, rather difficult to grasp. Its reliance on AI, and its collaboration with banks and credit unions, is, in theory, a sound strategy. A win-win for all concerned, one might say. But the future, as always, remains stubbornly opaque. To believe that this company will become a millionaire-maker in twenty-five years requires a degree of faith that borders on the naive.

The cyclical nature of the business is, to put it mildly, alarming. The sharp decline in revenue during the period of rising interest rates in 2022 and 2023 should serve as a cautionary tale. And one should not underestimate the resources and ambition of the established financial institutions. They are investing heavily in AI, employing the brightest minds, and developing their own innovative solutions. They will not, one suspects, relinquish their dominance without a fight.

I suspect, with a degree of melancholy, that Upstart’s returns will fall short of the required 20% annualized pace. The odds, in my estimation, are considerably less than 50%. But then, one is rarely rewarded for prudence. And the siren song of speculative finance continues to lure the unwary towards the rocks.

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2026-01-28 05:12