Upstart secures $1.2 billion loan purchase deal with Fortress

SAN MATEO, Calif. - Upstart (NASDAQ: UPST), a leading artificial intelligence lending platform whose stock has surged over 100% in the past year despite recent volatility, has entered into a forward-flow agreement with Fortress Investment Group LLC, with the investment manager committing to purchase up to $1.2 billion in consumer loans from Upstart until March 2026. According to InvestingPro data, the company, currently valued at $4.89 billion, has shown strong revenue growth of 23% over the last twelve months.

The partnership signifies Fortress’s strategy to invest in high-quality, risk-adjusted consumer credit assets, according to Matt Biczak, Managing Director at Fortress. Upstart’s AI-driven platform is recognized for its scaled, data-centric origination process with a proven credit performance record, which Biczak believes offers a valuable opportunity for investors. The company maintains a strong financial position with a current ratio of 14.31, indicating robust liquidity to meet short-term obligations.

This deal underscores Upstart’s ongoing efforts to forge substantial partnerships, aimed at ensuring a steady and diversified capital flow that can withstand varying economic conditions. Upstart’s CFO, Sanjay Datta, expressed enthusiasm about the growth in private credit and the trust it demonstrates in AI-enhanced lending.

Citi is set to provide the debt financing that will enable Fortress to fund the loan acquisitions.

Upstart, headquartered in San Mateo, California, is renowned for its AI lending marketplace that serves millions of consumers by linking them with over 100 banks and credit unions. These financial institutions utilize Upstart’s AI models and cloud applications to offer superior credit products. Upstart boasts that more than 90% of its loans are fully automated, requiring no human intervention. The company maintains an impressive gross profit margin of 76.66%, though InvestingPro analysis suggests the stock is currently trading above its Fair Value. For deeper insights into Upstart’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Fortress Investment Group LLC, established in 1998, manages $50 billion in assets as of December 31, 2024, for roughly 2,000 institutional and private investors globally. The firm’s Asset-Based Credit business specializes in providing capital solutions across a wide array of consumer receivables and other cash flow streams, predominantly in the U.S. and Europe.

The information for this article is based on a press release statement. It is important to note that forward-looking statements in the release are subject to various risks and uncertainties, and the actual outcomes may differ materially from those projected. Upstart has no obligation to revise any forward-looking statements as a result of new information or future events. Further details can be found in Upstart’s filings with the Securities and Exchange Commission.

In other recent news, Upstart Holdings has announced a strategic partnership with OneProgress Services LLC, a fintech company largely owned by Walmart Inc. This collaboration aims to market Upstart’s consumer lending products to Walmart’s vast customer base, although Upstart has stated that this partnership is not expected to materially impact its financial results for the fiscal year ending December 31, 2025. Despite this, analysts like Dan Dolev from Mizuho view the partnership positively, maintaining an Outperform rating with a $110 price target on Upstart’s stock.

Additionally, Upstart is set to report its Q1 2025 earnings soon, with analysts from JPMorgan maintaining a Neutral rating and a $79 price target, anticipating strong performance due to record loan originations. BofA Securities also upgraded Upstart’s stock rating from Underperform to Neutral, citing an improved risk-reward balance and setting a price target of $53.00. The upgrade reflects a more balanced view of Upstart’s market position amidst ongoing macroeconomic uncertainties.

Upcoming events such as Upstart’s first-quarter earnings report and an AI Investor Day are expected to provide further insights into the company’s performance and strategy. These developments come as Upstart continues to navigate a challenging economic landscape, while also exploring new strategic opportunities to expand its market presence.

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