Upstart's Push Into Auto and Home Loans: Will Diversification Pay Off?

Upstart Holdings UPST is leaning more into diversification as it works to broaden its business beyond personal loans. Management highlighted that newer verticals, like auto, home and small-dollar loans, are scaling quickly and becoming a more material part of the platform. In the third quarter, these products made up nearly 12% of total originations and accounted for 22% of new borrowers, reflecting real traction rather than early testing.

Auto lending continues to be the fastest mover. Upstart more than doubled its active lending rooftops, expanded into four additional states and grew auto-retail transaction volume more than 70% sequentially. Auto, home and small-dollar transaction volumes each climbed roughly 300% year over year. UPST business is being supported by improving software, tighter processes and new offerings like the auto-secured personal loan that is beginning to gain momentum.

Home lending is also progressing. Automation improvements have pushed automatic HELOC approvals from below 1% in June to about 20% in October. Partner banks and credit unions help Upstart offer competitive pricing, sometimes up to 300 basis points better than other fintechs, which strengthens the appeal of its home-equity product.

Diversification is also evident on the funding side. Upstart added seven new bank and credit-union partners in the third quarter, reached record monthly funding capacity and maintained 100% retention across all private-credit partners. Its September securitization was oversubscribed across all tranches, signaling strong investor confidence as the company expands into multiple credit categories.

Diversification at Other Fintechs: PayPal and Intuit

PayPal PYPL has broadened its business beyond peer-to-peer transfers by growing merchant services, digital wallets, and consumer credit products like PayPal Credit and Pay Later. Its PYUSD stablecoin and crypto payment features also strengthen its positioning for evolving digital commerce trends.

Meanwhile, Intuit INTU has grown beyond its tax and accounting roots, building a broader financial ecosystem. Credit Karma strengthens its consumer finance capabilities, while Mailchimp expands its presence in marketing automation for small and midsize businesses. Similar to Upstart, PayPal and Intuit are each broadening their core offerings to deepen platform engagement, diversify customer use cases and reduce reliance on any single revenue stream across their growing ecosystems.

Upstart’s Price Performance, Valuation and Estimates

Shares of Upstart have declined 24% in the past six months, underperforming both the broader industry and the S&P 500 composite.

From a valuation perspective, we note that Upstart shares are currently overvalued, as suggested by the Value Score of F.

In terms of forward 12-month Price/Sales (P/S), despite the share price decline, Upstart is currently trading at 3.00X, which is at a slight discount to the industry average of 3.06X.

While the full-year 2025 Zacks Consensus Estimate for EPS has been revised upward, the same for 2026 has undergone downward revisions over the past month. However, both figures suggest a significant increase year over year.

Currently, Upstart carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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