Upstart (UPST 5.28%) is one of those artificial intelligence (AI) stocks that got investors really excited when it IPO'd, but over its volatile history, the company has not always delivered on its promise, nor has the stock.
This fintech, which deploys AI to process, approve, underwrite, and fully automate loans, debuted on the Nasdaq in late 2020 at around $26 per share. A little more than five years later, it's trading at $32 per share. Along the way, it has taken investors on a wild ride.
By February 2021, it was trading at around $65 per share, and by October 2021, at the height of the tech boom, it soared to over $320 per share. During the banking crisis in spring 2023, the stock had fallen to around $12 per share. Over the next two years, it climbed back to more than $85 per share, but since last July, it has steadily dropped back to its current price of just over $29 per share.
Image source: Getty Images.
Over the past year, Upstart stock has dropped 65%, and year to date, it is off 33%.
Why Upstart has struggled
The Upstart platform helps banks and other lending organizations determine who should get loans using an AI program that helps streamline their own lending process. For this service, it charges a fee. It also provides loans directly to institutional investors and asset managers, using a third-party bank to provide the capital, for which it also charges a fee. It generates usage fee revenue as well as income from the volume of loans the platform processes.
The fintech has struggled for a few reasons, but mainly because of raised interest rates. Higher rates discourage lending activity, create higher borrowing costs, and lead to higher credit risk. An upcoming management transition, with the CEO stepping down in May, and a high stock valuation due to investor enthusiasm despite a lack of consistent earnings, also hurt the stock. Investor trust was also rattled by a management decision last year to stop providing quarterly guidance.
NASDAQ: UPST
Key Data Points
With economic and interest rate uncertainty still a concern in 2026, many investors are worried about credit risk and continued struggles this year.
Jefferies is a better option
So, Upstart is a bit of a mess as a potential investment right now. Where does that leave investors interested in fintech stocks? If you are looking to add a financial stock with some upside to your portfolio, consider Jefferies Financial Group (JEF 6.43%).
Jefferies is a top 10 investment bank, sitting in the so-called bulge bracket, which is typically reserved for diversified financial services giants like JPMorgan Chase, Morgan Stanley, Goldman Sachs, and others. But Jefferies' deal volume has been so strong, it has cracked that top 10.
NYSE: JEF
Key Data Points
It is more of a pure-play investment bank, as it doesn't offer traditional banking and other services that others in the space have. So, in times like this, when mergers and acquisitions and investment banking are taking off due to pent-up demand and falling interest rates, Jefferies will see greater revenue upside.
In Q4, investment banking revenue surged 20% and accounted for nearly 60% of total revenue.
With M&A activity volumes expected to remain elevated in 2026 and potentially beyond, with interest rates likely headed lower, Jefferies could have some continued tailwinds.
Wall Street sees 42% upside for the stock with a median price target of $76 per share. It's also trading at a reasonable 18 times earnings and 12 times forward earnings, making it a good value.
