To The Moon

$Upstart Holdings, Inc.(UPST)$ is scheduled to report its fiscal Q4 and full-year 2025 results on Tuesday, February 10, 2026, after the market closes. As a high-beta fintech stock, Upstart is known for extreme volatility around earnings. After a massive rally in 2025 driven by a return to profitability, the stock has recently pulled back, making this report a critical "prove it" moment for the current valuation.

Key Estimates & Expectations

Wall Street is looking for a significant year-over-year recovery, as the "funding crunch" of 2023–2024 has largely eased.

Upstart’s Q3 2025 earnings report was a tale of "Artificial Intelligence vs. Reality." While the company proved it could be highly profitable again, it also reminded investors that its AI models are strictly disciplined—sometimes to a fault.

Here is a summary of the results and the critical lessons learned from management's guidance.

Q3 2025 Performance Summary

Upstart delivered a massive "beat" on earnings, but a "miss" on revenue, which led to a mixed market reaction and an immediate post-earnings dip.

• Revenue: $277 million (+71% YoY). This slightly missed the analyst consensus of $281 million.

• Adjusted EPS: $0.52. This was a significant beat over the $0.42 expected, showing much stronger-than-anticipated profitability.

• GAAP Net Income: $32 million, a sixfold increase from the previous quarter.

• Transaction Volume: ~428,000 loans originated (~$2.9 billion), up 128% year-over-year.

• The "New Verticals": Auto, Home (HELOC), and Small-Dollar loans grew 300% YoY, proving that Upstart is successfully diversifying away from just personal loans.

The Lesson Learnt: "AI Conservatism"

The most important takeaway from the Q3 report wasn't the revenue miss, but why it happened.

1. The Model is the Boss

Despite receiving over 2 million applications (the highest in three years), Upstart’s conversion rate dropped from 23.9% to 20.6%.

• The Reason: The Upstart Macro Index (UMI) ticked up slightly in July and August. In response, the AI model automatically tightened approval criteria and raised interest rates.

• The Lesson: Management cannot "force" growth if the AI sees risk. Even if consumer demand is booming, the platform will throttle volume to protect credit performance. Investors must accept that Upstart's growth will always be "jagged" because it is tied to real-time macro data.

2. Trading Margin for Volume (The Q4 Pivot)

In their guidance, management signaled they would intentionally lower the contribution margin from 57% to ~53% in Q4.

• The Reason: After the Q3 "speedbump" where the model was perhaps too conservative, Upstart decided to increase marketing spend and slightly moderate "take rates" (the fees they charge) to recapture repeat borrowers and boost volume.

• The Lesson: Upstart has reached a level of profitability where they can now afford to "buy" market share. This indicates a shift from "survival mode" to "growth mode."

3. Stability is the New Goal

Management noted they have updated their calibration methodology to cut "unwanted volatility" in conversion rates by 50%.

• The Lesson: They heard the market's frustration with the 23% to 20% conversion swing. Moving forward, they are trying to smooth out how the AI reacts to small macro fluctuations so that revenue becomes more predictable.

What it means for Q4

The Q3 report set a high bar for efficiency but a lower bar for conversion. If the Q4 results (releasing tomorrow) show that the conversion rate has stabilized or climbed back toward 22% while maintaining the guided profitability, it will prove that the Q3 "speedbump" is officially in the rearview mirror.

Key Metrics to Watch

Beyond the top and bottom lines, these four metrics will determine if the stock "moons" or "craters":

1. Conversion Rate

In Q3 2025, Upstart saw a record number of applications, but their AI models remained conservative due to macro signals.

• The Goal: Look for the conversion rate to stay above 20%.

• The Risk: If borrower demand stayed high but the AI "rejected" too many applicants, revenue will miss expectations.

2. Contribution Margin

Management guided for a step down to 53% (from 57% in Q3).

• Upstart is intentionally spending more on marketing to recapture "repeat borrowers." If the margin drops below 50%, the market may fear that customer acquisition is becoming too expensive.

3. Funding Mix & "Forward-Flow" Agreements

Investors want to see Upstart acting as a marketplace, not a bank.

• Watch for updates on the $1.5B deal with Castlelake and other private credit partners.

• Red Flag: A significant increase in loans held on Upstart’s own balance sheet (R&D loans are fine; keeping loans because no one else will buy them is a disaster).

4. The "UMI" (Upstart Macro Index)

This is Upstart's internal measure of the credit environment. It peaked in late 2025. If management signals that UMI is declining (improving environment), it suggests they can loosen the AI's "conservatism" and approve more loans in 2026.

Upstart Holdings (UPST) Price Target

Based on13 analysts from Tiger Brokers app offering 12 month price targets for Upstart Holdings in the last 3 months. The average price target is $59.46 with a high forecast of $80.00 and a low forecast of $44.00. The average price target represents a 55.50% change from the last price of $38.24.

Short-Term Trading Opportunities

The options market is currently implying a ~15.5% move in either direction post-earnings.

• The Bull Case (The "Squeeze"): If Upstart beats on revenue and raises its 2026 outlook (citing lower interest rates or better AI efficiency), the high short interest could trigger a rapid "short squeeze." A break above the $45 resistance level could target $60 quickly.

• The Bear Case (The "Sell the News"): The stock surged 10% on Feb 6th in anticipation. If the results are "just okay" or if the contribution margin compresses more than expected, we could see a "gap and crap" where it opens high and is sold off back toward the $32–$35 support zone.

• Strategy Tip: Given the 15%+ implied move, "Straddles" (buying both a Call and a Put) are expensive. Many traders prefer Credit Spreads to capitalize on the high volatility (IV) crush that happens immediately after the announcement.

Technical Analysis - Exponential Moving Average (EMA)

Upstart have been trading on a negative RSI momentum despite attempt for an upside and the significant decline due to the recent market selling could have investors losing some confidence.

We saw a slight recovery last Friday (06 Feb), but can Upstart continue with this attempted upside to try pushing for a positive RSI momentum, but if Upstart could turned in stellar performance like Q3, then the current stock price might be a good entry point.

Summary

Upstart Holdings (UPST) reports its Q4 2025 results on Tuesday, February 10, 2026, after the market closes. This report is a defining moment for the stock, which has pulled back ~50% from its 52-week highs but remains up significantly over the last year.

The Financial Outlook

Wall Street expects a return to sustainable growth. The consensus estimates align closely with management's aggressive guidance:

• Revenue: ~$288.5M (+32% YoY)

• Adjusted EPS: $0.47 (+81% YoY)

• Adjusted EBITDA: ~$63M

Core Analysis: Growth vs. Discipline

The primary tension for Q4 is whether Upstart can turn record borrower demand into funded loans. In Q3, applications hit a 3-year high, but the AI model turned conservative, lowering conversion rates. Investors are looking for:

1. Conversion Recovery: Did the "calibration improvements" mentioned in Q3 lead to higher approval rates in Q4?

2. Margin Trade-off: Management guided a lower Contribution Margin (~53%) to fund growth. Investors will be sensitive to any drop below 50%, which could signal high customer acquisition costs.

3. Macro Tailwinds: The Upstart Macro Index (UMI) peaked in Q3 and improved throughout Q4. A declining UMI allows the AI to approve more loans at lower rates, potentially driving a "beat" in volume.

The "Balance Sheet" Debate

A key bear thesis remains the loans held on Upstart’s balance sheet ($1.2B as of Q3). While management argues these are primarily for R&D (Auto, HELOC, and Small-Dollar), the market wants to see third-party capital (like the $1.5B Castlelake deal) absorbing more of this risk. Progress here is likely more important for the stock price than a small revenue beat.

Trading Setup

With an implied move of 15.5%, the stock is a "battleground."

• Bull Case: A revenue beat combined with 2026 guidance suggesting $1.2B+ in revenue could spark a massive short squeeze.

• Bear Case: Any sign that the model is staying "too conservative" or that the balance sheet is growing will likely see the stock test its $32–$35 support levels.

Appreciate if you could share your thoughts in the comment section whether you think Upstart can stabilized or improved its conversion rate while maintaining its guided volatility?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.