Pagaya Skyrockets 225.3% YTD: Should You Still Buy the Stock?

Core Insights - Pagaya Technologies Ltd. (PGY) has seen a remarkable stock performance, increasing by 225.3% year-to-date, outperforming competitors LendingTree (TREE) and Upstart Holdings (UPST) [1][8] - The company has achieved two consecutive quarters of positive GAAP net income, marking a significant turnaround from previous losses [3] - Strong network volume growth, improved monetization, better operating leverage, and solid credit discipline have driven Pagaya's robust results [4][8] Financial Performance - Analysts have raised PGY's earnings estimates for 2025 and 2026 to $2.65 and $3.40 per share, indicating year-over-year growth rates of 219.3% and 28.3% respectively [16] - The Zacks Consensus Estimate for revenues in 2025 and 2026 is $1.31 billion and $1.53 billion, reflecting year-over-year growth of 28.4% and 16.3% [17] Business Model and Strategy - Pagaya's diversified and resilient business model reduces exposure to cyclical risks by expanding beyond personal loans into auto lending and point-of-sale financing [6] - The company has established a network of over 135 institutional funding partners, utilizing forward flow agreements to secure funding and mitigate market disruptions [9][15] - Pagaya operates a capital-efficient model that minimizes credit risk by avoiding holding loans on its balance sheet, enhancing financial flexibility [12][14] Valuation and Market Position - PGY stock is trading at a forward price/sales (P/S) ratio of 1.57X, which is below the industry average of 3.91X, indicating an attractive valuation [20] - Compared to LendingTree and Upstart, Pagaya's valuation appears favorable, trading at a discount to Upstart and a premium to LendingTree [22] Analyst Sentiment - Analysts express optimism regarding Pagaya's growth potential, with a Zacks Rank of 1 (Strong Buy) reflecting positive sentiment in the market [25]