NEW YORK CITY, NY / ACCESS Newswire / April 7, 2026 / Pomerantz LLP announces that a class action lawsuit has been filed against Upstart Holdings, Inc. ("Upstart" or the "Company") (NASDAQ:UPST) and certain officers.�� The class action, filed in the United States District Court for the Southern District of New York, and docketed under 26-cv-02974, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Upstart securities between May 14, 2025 and November 4, 2025, both dates inclusive (the "Class Period"), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
If you are an investor who purchased or otherwise acquired Upstart securities during the Class Period, you have until June 8, 2026, to ask the Court to appoint you as Lead Plaintiff for the class.â?¯ A copy of the Complaint can be obtained at www.pomerantzlaw.com. â?¯To discuss this action, contact Danielle Peyton at newaction@pomlaw.comâ?¯or 646-581-9980 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.â?¯
[Click here for information about joining the class action]
Upstart, together with its subsidiaries, operates a cloud-based artificial intelligence ("AI") lending platform in the United States. Its platform includes unsecured personal loans, small dollar loans, auto refinance, auto retail loans, auto secured personal loans, and home equity lines of credit.
Upstart purportedly uses its proprietary AI models to, inter alia, more accurately quantify the true risk of a loan, a process that it refers to as "risk separation." The Company claims that this differentiated approach to underwriting has generally led to higher approvals and lower interest rates relative to traditional lending practices, providing more predictable returns to its capital partners, including banks, credit unions, and institutional investors. Defendants periodically calibrate Upstart's AI models to improve accuracy and automation of loan approvals.
In early May 2025, Upstart launched the latest iteration of its AI model, referred to as "Model 22". At all relevant times, Defendants touted the purported accuracy of Model 22, claiming that it was increasing loan approval rates and, accordingly, the Company's revenues and growth. For example, in February 2025, Upstart issued financial guidance for the full year ("FY") of 2025, including, inter alia, revenue of approximately $1 billion, which included revenue from fees of approximately $920 million. In May 2025, Defendants slightly raised the foregoing guidance to revenue of approximately $1.01 billion, which still included revenue from fees of approximately $920 million. Then, in August 2025, Defendants substantially raised the foregoing guidance to revenue of approximately $1.055 billion, which included revenue from fees of approximately $990 million - $70 million more than previously projected - citing improvements in performance driven by Model 22.
The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Model 22 frequently overreacted to negative macroeconomic signals in performing its risk-separation processes; (ii) accordingly, Model 22's overall accuracy and propensity to increase loan approval rates was overstated; (iii) Model 22's overly conservative assessment of credit and macroeconomic conditions was having a significant negative impact on Upstart's revenue results, rendering the Company's previously issued FY 2025 revenue guidance unreliable and/or unrealistic; and (iv) as a result, Defendants' public statements were materially false and misleading at all relevant times.
The truth began to emerge on November 4, 2025, when Upstart issued a press release reporting its financial results for the third quarter ("Q3") of 2025. Upstart reported, inter alia, Q3 2025 revenue of $277 million, missing its previously issued Q3 2025 revenue guidance of approximately $280 million, as well as consensus estimates by $2.62 million. Upstart also reported that it expected to generate revenue of only $288 million in the fourth quarter ("Q4") of 2025, significantly below consensus estimates of $303.7 million. Further, Upstart negatively revised its FY 2025 revenue guidance to approximately $1.035 billion, versus the $1.06 billion consensus estimate and its prior guidance of approximately $1.055 billion, as well as its expected FY 2025 revenue from fees, which it reduced to approximately $946 million from its prior outlook of approximately $990 million.
The same day, during a related earnings call, Defendants blamed Upstart's disappointing results on Model 22, which they revealed had "overreact[ed]" to macroeconomic signals in the quarter, reducing borrower approvals and conversion rates. Defendants also acknowledged that they had "knowingly" calibrated their AI model to be "more conservative on the credit side in earlier parts of the quarter", and that the negative impacts of Model 22's "overresponsive[ness]" to macroeconomic signals in the quarter would continue to negatively impact revenues in Q4 2025, resulting in Upstart's negatively revised FY 2025 financial guidance.
Following these disclosures, Upstart's stock price fell $4.49 per share, or 9.71%, to close at $41.75 per share on November 5, 2025.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.
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SOURCE: Pomerantz LLP
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