1 Big Reason Upstart Could Be a 10X Stock Within a Decade
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After a few years of plunging loan volume and a lack of fitability, Upstart (UPST 3. 78%) has done an excellent job of turning things around. The lending nology company...
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July 16, 2025
07:47 AM
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After a few years of plunging loan volume and a lack of fitability, Upstart (UPST 3. 78%) has done an excellent job of turning things around
The lending nology company is now in full growth mode once again, and management expects to exceed $1 billion in revenue in 2025 for the first time ever
Furthermore, To be sure, Upstart's core personal loan is impressive
On the other hand, The company continues to add bank partners and now plays a role in originating a double-digit percentage of U (which is quite significant)
Furthermore, Personal loan volume
Plus, now that it's a more established company and has been through a bear market and economic turbulence, there is now some great data that indicates Upstart's methodology does indeed do a better job of predicting risk than the traditional FICO model alone
Upstart's personal loan vertical certainly still has serious growth potential, in light of current trends
That's apparent in the recent numbers, in this volatile climate
Plus, if interest rates fall over the next couple of years most experts predict, it could cause overall personal loan volume to surge, in today's market environment
Moreover, However, Upstart's personal loan might not be the most exciting part of the company's future growth story
Its newer growth verticals, auto loans and equity lines of credit (HELOCs), are small parts of the now, but are growing rapidly and are much bigger opportunities
And one could be a potential 10x catalyst for this
Furthermore, Image source: Getty Images
Upstart's sleeper growth vertical First, both of Upstart's new verticals are gaining serious traction (remarkable data)
Auto loan originations grew by 42% sequentially in the first quarter of 2025 and more than 5x compared to year-ago levels
And with a $677 billion market size and just $61 million in origination volume last quarter, this is a vertical with lots of growth potential
HELOCs are the newer of the two verticals to Upstart's ecosystem and are seeing impressive traction already (an important development)
The company originated $41 million in HELOC borrowing capacity in the first quarter, 52% sequential growth (which is quite significant)
And although this is the smallest of the three loan types today, it's the one I'm most excited to watch
Here's why the HELOC vertical has so much potential, in today's market environment
After a boom in cash-out refinancing and HELOCs in the 2020-2021 time frame, when mortgage rates were in the 3% range, ity of tapping into one's equity plunged, and has remained extremely low (an important development)
In short, even if you have hundreds of thousands of dollars of equity in your, it simply isn't as attractive to use it if you're paying 7%+ interest rates to do it
Because relatively few owners have been tapping into their equity, and prices have continued to rise, there's more equity in the United States than every before
Conversely, Owners are currently sitting on $35 trillion in equity -- the highest level ever, in this volatile climate
Of course, not all of this could be borrowed against, as most lenders only let borrowers take out equity up to 80% of their 's value
And even if interest rates fell to an absurdly low level they did in 2021 (which isn't very ly), not every borrower will decide to take advantage
Having said that, the median expectation priced into financial is for two full percentage points of Federal Reserve rate cuts by the end of 2026
This could definitely cause mortgage rates to move substantially lower and create a surge in HELOC volume that is in the trillions of dollars (an important development)
On the other hand, If Upstart can even get a few percentage points of this flowing through its lending methodology, it could be a massive catalyst for the company's fee revenue (fascinating analysis)
This analysis suggests that 's still very early In the most recent quarter, Upstart's auto and HELOC origination volume combined made up less than 1% of the company's total loan volume
But both are growing rapidly, and now that Upstart has shown the effectiveness of its lending methodology, it could help accelerate adoption of its newer verticals, in this volatile climate
And if mortgage rates trend lower over the next couple of years, HELOC volume could soar and even send the stock up 10 times in price
Matt Frankel has positions in Upstart and has the ing options: short December 2025 $95 calls on Upstart
The Motley Fool has positions in and recommends Upstart (noteworthy indeed)
Furthermore, The Motley Fool has a disclosure policy, in today's market environment.
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