Upstart Holdings: Superior AI Stock Over Opendoor Tech

Published Date : 15/09/2025 

While Opendoor Technologies has seen a meteoric rise, Upstart Holdings offers a more stable and profitable investment opportunity in the AI-driven fintech sector. 

Opendoor Technologies has been on a tear, but this fintech stock looks like a better long-term winner.

Opendoor Technologies (OPEN) has been one of the most talked-about stocks over the past three months. The online home-flipper's stock price jumped an incredible 1,400%, from just over $0.50 to more than $10 at one point. The rally began with hedge-fund manager Eric Jackson making the case that Opendoor could be the next Carvana, which saw its stock price surge to almost 100 times its original value after nearly going bankrupt in 2022. This argument gained traction online, turning Opendoor into a meme stock that surged on high volume and no news.

Since then, the stock has gained on real news. The prospect of the Federal Reserve lowering interest rates and the company's board overhauling its management team have contributed to the surge. In August, CEO Carrie Wheeler stepped down, and after hours on Wednesday, Opendoor named Shopify's chief operating officer, Kaz Nejatian, as its new CEO, which sent the stock up 80% on Thursday. Additionally, co-founders Keith Rabois and Eric Wu rejoined the board of directors, and ventures associated with them invested $40 million into Opendoor. These developments injected enthusiasm into the stock, especially after it was on the verge of being delisted by the Nasdaq stock exchange earlier.

However, nothing has really changed for Opendoor as a business in the last three months. The company has never reported a full-year profit, and the business is expected to shrink this quarter due to the weak housing market. It remains a high-risk investment with a questionable business model. If you're looking for a similar stock that can capitalize on falling interest rates, I think that Upstart Holdings (UPST) is a better bet and that it can outperform Opendoor over the next three years.

Upstart has several things in common with Opendoor. Both companies went public around the same time in 2020 and initially surged before plunging in 2022 as interest rates rose and tech stocks crashed. Upstart is a loan originator that uses artificial intelligence (AI) technology to screen applicants, producing results it claims are significantly better than traditional FICO scores. Once it creates a loan, it typically sells it to one of its funding partners, so it doesn't keep the debt on its books.

Like Opendoor's, Upstart's business was struggling back in 2022, but the company revamped its business with an improved AI model that increased conversion rates for its loans. Even in a high-interest-rate environment, Upstart is delivering strong revenue growth and is now profitable based on generally accepted accounting principles (GAAP). Revenue in the second quarter jumped 102% to $257 million, on a 159% increase in transaction volume. The company reported GAAP net income of $5.6 million, and for the full year, it expects that to be $35 million.

Upstart built its business around consumer loans but is rapidly expanding into auto and home loans. The home loan market, where it could potentially compete with Opendoor, is massive. In the second quarter, Upstart's home originations grew nearly 800% from the year-ago quarter to $68 million. While this is still a small fraction of its business, there's clearly more growth ahead in the home loan market for Upstart.

Upstart and Opendoor have similar market caps following Opendoor's surge. Upstart is valued at $6.1 billion as of Friday, while Opendoor's market cap is $6.7 billion. Both companies are chasing massive addressable markets and are likely to benefit from lower interest rates. However, Upstart is the only one of the two that has proven it can grow in a challenging macro environment, and its business now looks set for consistent profitability. At Opendoor, meanwhile, there are real questions about whether home-flipping can scale up as a business model and deliver a consistent profit. Notably, both Zillow Group and Redfin (a subsidiary of Rocket Companies) bowed out of the iBuying competition, finding it too difficult and prone to large losses.

Given these differences, despite the fanfare over Opendoor, Upstart looks like the better bet today. Over the next three years, Upstart is set to be the winner of the two. 

Frequently Asked Questions (FAQS): 

Q: What is Opendoor Technologies?

A: Opendoor Technologies is an online home-flipping company that allows homeowners to sell their homes quickly and easily. The company has faced challenges in profitability and scalability.

Q: What is Upstart Holdings?

A: Upstart Holdings is a fintech company that uses artificial intelligence to facilitate loan origination. It has shown strong growth and profitability, particularly in consumer and auto loans.

Q: Why is Upstart considered a better investment than Opendoor?

A: Upstart has demonstrated consistent growth and profitability, even in challenging economic conditions. It has also expanded into new markets like auto and home loans, offering more growth potential compared to Opendoor's questionable business model.

Q: What role does AI play in Upstart's business model?

A: AI is central to Upstart's loan origination process, allowing it to screen applicants more effectively than traditional FICO scores. This has led to higher conversion rates and reduced risks for the company.

Q: What are the potential risks of investing in Opendoor?

A: Opendoor faces significant risks, including questions about the scalability and profitability of its home-flipping business model. The company has a history of financial struggles and is still not consistently profitable. 

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