After a turbulent couple of years following the interest rate spikes of 2022, Upstart's (UPST 4.33%) business has grown nicely. In fact, despite the persistent high-rate environment and economic uncertainty, Upstart's loan origination volume grew by a staggering 89% year over year in the first quarter of 2025.
Upstart's management is calling for the company to produce its first billion-dollar revenue year ever in 2025. Think about that -- not even during the extreme low-interest environment of 2021 did Upstart ever manage a billion dollars.
Image source: Getty Images.
There are other reasons for Upstart shareholders to be optimistic. The company's loan data shows that it does a more effective job of predicting loan defaults than the traditional FICO model. And after several years of losses, Upstart managed an adjusted EBITDA margin of 20% in the latest quarter and is virtually breakeven on a GAAP net income basis.
1 big reason to buy Upstart now
To be clear, Upstart's personal loan vertical has been firing on all cylinders. But it's the two newer verticals -- auto loans and home loans, specifically home equity lines of credit (HELOCs) -- that are most exciting.
The auto lending market is a massive one that is several times the size of the personal loan industry. And in the latest quarter, Upstart's auto originations were nearly five times what they were a year ago.
Mortgages could be the really big opportunity here. Upstart's HELOC origination volume, which launched a little over a year ago, grew 52% sequentially in the first quarter. Combined, auto and home loans make up about 2% of the company's total loan originations today but could end up being the biggest driver of growth.
One key statistic worth knowing is that U.S. homeowners are sitting on an all-time high $35 trillion in home equity, and many are just waiting for the opportunity to tap into it at lower rates.
