Upstart’s 26.7% Refund Surge Cuts Loan Demand, Bolsters SoFi Competition
Upstart’s projected 26.7% jump to $3,800 in average 2026 tax refunds is expected to cut demand for personal loans among its low-credit borrowers. The stock has plunged more than 60% year-to-date and analysts have slashed 2026 EPS forecasts, potentially enabling SoFi to capture market share from a weakened competitor.
1. Upstart’s Tax Refund Headwind
Upstart projects the average U.S. tax refund to rise 26.7% to $3,800 in 2026, reducing the need for personal loans among its core low-credit customer base and eroding originations on its AI-driven platform.
2. Regulatory Scrutiny on AI Lending
The incoming administration’s focus on loan fairness may tighten underwriting rules, placing Upstart’s nontraditional, algorithmic approval model under increased regulatory scrutiny.
3. Upstart Share Underperformance
Shares of Upstart have tumbled over 60% in the past year as Wall Street analysts cut 2026 and 2027 EPS forecasts, reflecting investor concerns over slowing growth and rising credit risk.
4. Implications for SoFi Technologies
With Upstart’s platform facing headwinds, SoFi could capitalize on displaced borrowers and industry consolidation to boost its own loan volume and expand market share among mid- to low-credit consumers.