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Pagaya Technologies Ltd. (PGY): A Bull Case Theory

Core Thesis - Pagaya Technologies Ltd. is positioned as a disruptor in the credit services industry, utilizing AI to enhance lending processes and improve access to credit for underserved consumers [2][6] Company Overview - Pagaya operates as an AI-driven intermediary, integrating with 31 partners including SoFi and major U.S. banks, to provide analysis on rejected loan applications [2] - The company employs machine learning models that assess repayment likelihood using diverse data sets beyond traditional FICO scores [3] Financial Performance - Pagaya is now profitable, generating $110 million in free cash flow, with $297 million in manageable long-term debt and a year-over-year revenue growth of 30% [4] - The stock price was $39.66 as of September 12th, with a forward P/E ratio of 13.46, indicating potential for valuation re-rating [1][4] Market Position and Growth Potential - The company has a wide market exposure across various sectors including auto, credit card, personal loans, point-of-sale, and rental markets [3] - With 42% of U.S. consumers underserved by traditional credit scoring, Pagaya's negotiations with 80% of the top 25 U.S. banks highlight significant growth opportunities [5] Institutional Support - Strong institutional buying from firms like BlackRock, Vanguard, and Citadel has supported Pagaya's stock surge [4] - The pace of shareholder dilution has slowed, and the fundamentals justify the current stock price with a potential upside to $67 in five years under conservative assumptions [4]