TL;DR: Upstart will never experience the glorious stock gains in 2020-2021 since those same rich conditions will not be repeated. Also, they're in trouble and need a bank charter to turn things around. The approval hinges on very crucial points where they are weak and so they will not get approval. The war is a catalyst causing more problems for Upstart. Inflation will rise and increase costs for their borrowers, which eats in to their ability to make repayments. The Fed will be forced to maintain or hike rates increasing critical strain on their borrowers and increasing delinquency rates.
The backdrop in 2020-2021: the Federal Funds Rate (FFR) was between 0% - 0.25% and the minimum reserve requirement ratio was 0. This caused the insane spike you see in M1 during that time period (because borrowing was virtually free and banks wanted to make as much money as possible). This also caused a bottleneck for everyday people like you and me who wanted loans. The traditional lending system was not created for this event. Rather, it was created for normal economic conditions. However, 2020-2021 was not a normal time period. It called for unconventional methods. Cue Upstart.
Upstart, as stated on its website, "aim\[s\] to radically reduce the cost and complexity of borrowing for all Americans by using our proprietary AI models to remake the entire lending process."
Reduce the complexity of borrowing.
That's exactly what it did during that time. It simplified the process and it captured market share in the lending space. There was an insatiable demand for loans and the old system could not simply process these loans fast enough. As a result, Upstart was able to capitalize on this inefficiency.
Q1 2021 - Q4 2021 saw unspeakable growth. Revenue grew 1,018% in Q2 2021 which saw an Adjusted EPS of $0.62. The revenue kept climbing and they kept beating Wall Street. Then, we started a new year with 2022 and the music stopped. Russia invaded Ukraine and we had an inflation problem. We were hiking the Federal Funds Rate and so down went Upstart.
Throughout 2022 - 2024, Upstart's revenues fluctuated, and their losses seemed somewhat minimal. Then, enter 2025, positive EPS and consistent revenue seeing the stock price rise up into the \~$80s. The effect of their stock price was compunded by the fall in inflation (though still elevated). Then, out of nowhere, we saw a sudden drop in stock price. Loans on the balance sheet. Sure, that's the reason the stock sold off. The truth is, the revenue is weak and they can barely hold on to the cash they earn. I guarantee you this isn't going to stop.
Their margins are razor thin no matter how much they earn in either rich conditions or poor. In 2021, their peak EPS was $0.61 with revenue at $305M. In the latest report Q1 2026, they had negative EPS of $0.08 with revenue at $308M. Upstart is no longer a "new" company anymore.
They have been in existence since 2012 and trading on the exchange for \~5 years now. Any revenue or EPS they report has to be 10X better for it to have any effect on the lay investor or speculator. I guarantee you, they will never achieve these numbers. However, they have a hail mary.
The Bank Charter.
If approved, they'll able to have access to deposit funding. They're currently backed by Private Credit partners. That's right, private credit. The one with the bubble at the moment. This could save them maybe 4-5%-improving bottom line. It reduces their regulatory complexity due to different states having different lending laws, rate caps, and licensing requirements. The charter bypasses these things. About 18 banking charter apps were filed in 2026. Nubank was approved within 4 months of applying.
If not approved, they're stuck with private credit concentration which doesn't help them one bit and keeps them stuck where they are. Ultimately, it will be their demise.
The bank charter is no guarantee and it's really their last hope. I imagine th