UPST Investor Alert: Upstart Holdings Securities Fraud Lawsuit - Investors With Losses May Seek to Lead the Class Action After Allegedly Misleading on Model Performance: Levi & Korsinsky

Key Dates and Disclosure Events Shareholders Need to Know

NEW YORK, May 20, 2026 /PRNewswire/ -- Levi & Korsinsky, LLP encourages investors who suffered losses in Upstart Holdings, Inc. (NASDAQ: UPST) to contact the firm. Those who purchased UPST securities between May 14, 2025 and November 4, 2025 may be entitled to recover damages. Find out if you are eligible to recover losses or contact Joseph E. Levi, Esq. at [email protected] or (212) 363-7500.

Upstart shares fell $4.49, or 9.71%, closing at $41.75 on November 5, 2025, after the Company disclosed that its flagship AI underwriting system had been suppressing loan approvals throughout Q3 2025. The window to apply for lead plaintiff closes on June 8, 2026.

May 14, 2025: The "AI Day" Launch

Upstart hosted its inaugural AI Day investor event in New York City. The Company's leadership showcased what they described as breakthroughs in proprietary AI underwriting technology. Presentation materials stated that the Company's AI "[m]odel accuracy drives more approvals." The event coincided with the recent rollout of Model 22, the latest iteration of its risk-separation system. Upstart's FY 2025 revenue guidance at this point stood at approximately $1.01 billion, with fee revenue of approximately $920 million.

August 5, 2025: Revenue Guidance Raised Sharply

Upstart reported Q2 2025 results and substantially raised its FY 2025 revenue guidance to approximately $1.055 billion, including fee revenue of approximately $990 million, an increase of $70 million over prior projections. Management attributed the acceleration to Model 22, citing conversion rate improvements from 19% in Q1 to 23.9% in Q2 and a 159% year-over-year increase in loan transaction volume. The lawsuit contends that at this time, management was aware of Model 22's tendency to overrespond to macroeconomic signals but failed to disclose this risk to shareholders.

Q3 2025 (July through September): The Undisclosed Conservative Shift

As alleged in the action, Model 22 reacted to modest upticks in the Upstart Macro Index during July and August by tightening credit approvals, reducing both approval rates and loan offer attractiveness. The securities action claims that conversion rates dropped from 23.9% in Q2 to 20.6% in Q3 as a direct result. During this period, one executive later acknowledged that the Company was "knowingly making a choice with our model to be a little bit more conservative on the credit side."

November 4, 2025 (Post-Market): The Corrective Disclosure

Upstart reported Q3 2025 revenue of $277 million, missing its own guidance of $280 million and consensus estimates by $2.62 million. The Company issued Q4 2025 revenue guidance of just $288 million versus the $303.7 million consensus. FY 2025 revenue guidance was cut to $1.035 billion, and fee revenue expectations fell to $946 million from $990 million. On the earnings call, leadership revealed that Model 22 had "overreacted" to macroeconomic signals, that its responsiveness was compounded by "sampling and measurement error," and that Q4 results would continue to reflect this conservative bias.

"Timely disclosure of material developments is fundamental to fair and efficient markets. The chronology here raises serious questions about the gap between what was known internally and what investors were told," stated Joseph E. Levi, Esq.

Timeline of Alleged Disclosure Failures

• May 14, 2025: AI Day presentation touts model accuracy as the driver of higher approval rates and growth
• August 5, 2025: FY 2025 fee revenue guidance raised by $70 million, attributed to Model 22 improvements
• July/August 2025: Model 22 allegedly begins overreacting to macro signals, suppressing approvals and conversion rates
• Q3 2025: Conversion rate falls 330 basis points from Q2, the filing states, as the conservative model bias takes hold
• November 4, 2025: Management reveals Model 22 was "overresponsive," plagued by measurement error, and that the impact would persist into Q4
• November 5, 2025: UPST shares close at $41.75, down 9.71%

Submit your claim before the deadline or call Joseph E. Levi, Esq. at (212) 363-7500.

ABOUT LEVI & KORSINSKY, LLP -- For over two decades, Levi & Korsinsky has represented shareholders in securities class actions. The firm has secured hundreds of millions of dollars for aggrieved investors and has been ranked in ISS Securities Class Action Services' Top 50 Report for seven consecutive years. Those wishing to serve as lead plaintiff must act by June 8, 2026.

Frequently Asked Questions About the UPST Lawsuit

Q: When did Upstart allegedly mislead investors?A: The class period runs from May 14, 2025 to November 4, 2025. The alleged fraud was revealed through corrective disclosures on November 4, 2025, causing a significant stock decline the following trading day.

Q: How much did UPST stock drop?A: Shares fell approximately 9.71%, a decline of $4.49 per share, after the Company disclosed that Model 22 had overreacted to macroeconomic signals, reducing borrower approvals and prompting downward revisions to FY 2025 revenue guidance. Investors who purchased shares during the class period at artificially inflated prices may be entitled to compensation.

Q: What do UPST investors need to do right now?A: Gather brokerage records including purchase dates, share quantities, and prices paid. Contact Levi & Korsinsky for a free, no-obligation evaluation at [email protected] or (212) 363-7500. No immediate action is required to remain eligible as a class member.

Q: What if I already sold my UPST shares, can I still recover losses?A: Yes. Eligibility is based on when you purchased, not whether you still hold the shares. Investors who bought during the class period and sold at a loss may still participate.

Q: Do I need to go to court or give testimony?A: No. The overwhelming majority of class members never appear in court or give depositions. You submit a claim form to receive your portion of any recovery.

Q: What does it cost me to participate?A: Nothing. Securities class actions are handled on a pure contingency basis. No upfront fees, no retainer, no out-of-pocket costs.

Q: What if I missed the lead plaintiff deadline?A: The deadline applies only to investors seeking lead plaintiff appointment. Class members who miss it can still participate in any settlement or recovery.

CONTACT: Levi & Korsinsky, LLP Joseph E. Levi, Esq. Ed Korsinsky, Esq. 33 Whitehall Street, 27th Floor New York, NY 10004 [email protected] Tel: (212) 363-7500 Fax: (212) 363-7171

SOURCE Levi & Korsinsky, LLP