TenQ

The Upstart story

Upstart uses AI to approve consumer loans funded by banks and investors, with the question of whether expanding into auto and home lending can become profitable without increasing its own funding burden.

Written from Upstart's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $23.03share price, last close
  • $2.2Bmarket value
  • 5/36TenQ Score checks passed

The story in brief

  • Loan volume accelerates. Originations reached $4.2 billion across 558,014 loans in the quarter to June 2026, both up 50% from a year earlier.
  • Secured losses narrow. Auto and Home contribution margin improved to negative 35% in the quarter to June 2026 from negative 176% a year earlier, but remained below profitability.
  • Margins trail volume. Contribution Profit rose 37% to $193 million in the quarter to June 2026, while Contribution Margin fell to 55% from 58% a year earlier.

What drives the business

  • Upstart's AI lending marketplace spans personal loans, auto loans and home equity lines of credit, with 91% of loans fully automated in 2025.
  • Revenue comes primarily from platform, referral and servicing fees paid by lending partners and institutional investors, while Credit Karma is a significant source of borrowers.
  • In 2025, the top three lending partners originated 83% of marketplace loans and generated fees accounting for 61% of total revenue, making partner relationships central to the business.
  • Institutional investors funded 64% of originations in 2025, lending partners retained or purchased 26%, and Upstart held 10% on its balance sheet, while its 2025 annual report said more than 50% of platform funding came through committed capital and other co-investment arrangements.
  • In March 2026, Upstart announced plans to apply for a national bank charter that, subject to approval, would allow deposit funding and direct lending, while management said outside banks, credit unions and institutional funds would remain the source of the vast majority of loan capital.

What the price assumes

The growth embedded in the $23.03 share price is not measured because TenQ does not run a reverse DCF for finance industry companies, whose free cash flow may not measure earnings.

Upstart trades at 41.0x earnings and 1.8x revenue, against revenue growth of 46.3% over the last twelve months but annual growth of 4.8% over the last three years.

TenQ's earnings yield check requires a yield above the 10-year Treasury's 5.2%, compared with Upstart's 2.4%, while its sustained growth check compares Upstart's 4.8% pace with a sector bar of 23.4%.

What could change the story

  • Dependence on outside loan capital leaves growth exposed to funding availability and credit performance, while loans retained on Upstart's balance sheet and risk sharing arrangements expose it directly to borrower outcomes.
  • Unsecured lending generated $326 million in fee revenue at a 62% Contribution Margin in the quarter to June 2026, leaving the core business to support secured products that still generate contribution losses.
  • Total debt of $2.0 billion compares with $456 million in cash and short-term investments, and free cash flow was -$289 million over the last twelve months, although lending activity complicates cash flow interpretation.
  • TenQ's financial health checks passed 0 of 6, including interest coverage of 1.29 against a 5.00 bar.
  • The planned bank charter remains subject to regulatory approval, so access to deposits and the proposed reduction in operating complexity are not assured.

What to watch next

  • Upstart maintained guidance for full-year 2026 revenue of approximately $1.4 billion, fee revenue of approximately $1.3 billion and Adjusted EBITDA of approximately $294 million at a 21% margin.
  • The next releases will show whether unsecured fee growth and contribution margins can hold while Auto and Home move closer to positive contribution margins.
  • Funding mix, retained loans and cash balances will show how much balance sheet support marketplace growth requires.
  • Share count and stock compensation will show how the $100 million repurchase announced in February 2026 interacts with dilution, after shares rose 29.9% over three years and stock compensation reached $146 million over the last twelve months.

Sources

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