Upstart Stock Could Pop on a Short Squeeze Soon

Key Points

• Upstart stock, backed by a strong fundamental story, now presents an upside opportunity for investors to consider in the coming months.
• Wall Street analysts now see double-digit upside for this company through higher ratings.
• Institutional buyers have jumped in ahead of the big move happening.

Every industry eventually reaches a point where new technology sparks a long-term cycle of efficiency and productivity gains, marking a pivotal moment of transformation. One area in today’s financial sector is on the verge of such a breakthrough, creating a significant opportunity for investors who recognize the shift.

The lending and credit industry relies heavily on discretionary judgment from bankers or financial analysts. However, a simple algorithm can handle lending decisions and fact-checking.

This is the perfect job for artificial intelligence to begin automating and improving, which would free more human capital to focus on the decisions that genuinely should be discretionary.

This is exactly the setup investors should love for a company like Upstart Holdings Inc. NASDAQ: UPST, especially as the stock is now on the cheaper end of the spectrum relative to both its previous highs and, more importantly, relative to its future expected earnings per share (EPS) growth.

Both of these factors have led some on Wall Street to take action already, and this is why retail investors should want to dig in for themselves.

The Biggest Upside Tail Risk for Upstart Stock

Not only is this fundamental industry setup perfect for Upstart, but the technicality of the trade itself is also perfect. When investors look into the company’s short interest, they will quickly find that this could be one of those future “short squeezes,” an event that can only take place when the balance is as big as Upstart’s.

The company reveals that bearish traders currently hold $1.4 billion worth of short positions, representing 21.9% of the total stock float, which is enough to trigger this short squeeze scenario. A short squeeze occurs when a stock surges strongly enough to force these short sellers to close their positions, which involves buying back the stock.

That additional buying pressure is precisely where the squeeze aspect comes in, as the price could abruptly rally farther than most would think due to all this new capital coming in on the buy side. Now every investor is asking: Does Upstart have enough fuel in the tank to take its stock price for such a ride?

This question has several angles from which it can be answered. Still, the strongest one could be the stock’s price today relative to where its future fundamentals are expected to be, and the wide gap that disconnects the two to create the upside opportunity all investors want to see.

Upstart’s Ceiling Is Much Higher

Now that the stock trades at only 60% of its 52-week high levels, the technical discount is undeniable, but the fundamental one is where most investors will find the confidence to risk their capital in this company's future, as some on the “smart money” side of the market already have.

Geode Capital Management increased its holdings of Upstart stock by 3.8% as of early August 2025, bringing its total investment to a high of $129.9 million, or 2% ownership of the entire company. This signals a clear bullish outlook, confirming that the underlying fundamentals are solid enough to push this stock higher.

Looking at Upstart's most recent earnings results, investors can see that the company is already showing what it is capable of even before the long-term secular growth trend gets started. While the broader market was expecting Upstart to report twenty-seven cents in earnings per share (EPS), the company blew past those expectations.

With a 36-cent reported EPS, this beat in expectations creates the foundation for filling the upside gap, but that is yesterday’s news. 

Markets are inherently forward-looking, meaning that what matters most now is tomorrow’s earnings, especially as the numbers start to increase.

Currently, Wall Street analysts expect to see roughly 70% EPS growth over the next 12 months, and today’s valuation of Upstart stock is not even close to reflecting that yet. With this in mind, investors can look at the future and expect time to consider this divergence between today’s price and tomorrow’s fundamentals.

Therefore, it shouldn’t be surprising to see other analysts start to give their opinions on Upstart’s future. While the consensus view is of a Hold and $77.8 price target, some decided to land on a more accurate opinion for this company.

Piper Sandler analyst Patrick Moley is one of these analysts, seeing Upstart as an Overweight valued at $90 per share.

This view calls for a 40% additional upside potential for investors to tag into for Upstart stock in the coming months, which could be only the beginning if an actual short squeeze is triggered.