Gainey McKenna & Egleston Announces A Class Action Lawsuit Has Been Filed Against Upstart Holdings, Inc. (UPST)

NEW YORK, April 08, 2026 (GLOBE NEWSWIRE) -- Gainey McKenna & Egleston announces that a class action lawsuit has been filed against Upstart Holdings, Inc. (“Upstart” or the “Company”) (NASDAQ: UPST) in the United States District Court for the Northern District of California on behalf of investors who purchased Upstart stock between May 14, 2025 and November 4, 2025, inclusive (the “Class Period”).

The Complaint alleges that Upstart, together with its subsidiaries, operates a cloud-based artificial intelligence (“AI”) lending platform in the U.S. and that the platform includes unsecured personal loans, small dollar loans, auto refinance, auto retail loans, auto secured personal loans, and home equity lines of credit.

The Complaint further alleges that 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 Complaint continues to allege that 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. The Complaint states that Defendants periodically calibrate Upstart’s AI models to improve accuracy and automation of loan approvals.

According to the Complaint, in early May 2025, Upstart launched the latest iteration of its AI model, referred to as “Model 22”. The Complaint states that 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.

The Complaint alleges that Defendants failed to disclose to investors 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 Complaint alleges that 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. The Complaint alleges that the same day, during an 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. The Complaint states 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.

The Complaint states that as a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages.

Investors who purchased or otherwise acquired shares of Upstart should contact the Firm prior to the June 8, 2026 lead plaintiff motion deadline. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at tjmckenna@gme-law.com or gegleston@gme-law.com.

Please visit our website at http://www.gme-law.com for more information about the firm.

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