Why Pagaya Stock Skyrocketed 90% in July
Shares of artificial intelligence (AI) credit platform Pagaya Technologies (NASDAQ: PGY) gained 90% in July, according to data provided by S&P Global Market Intelligence. The company announced several new rounds of funding even in this tight environment.
It hasn't been easy to asses credit in this climate of rising interest rates. Pagaya operates a platform that assesses credit risk through AI and identifies more opportunities for loans without increasing the risk to lenders, similar to the popular stock Upstart. Its model includes generating funding from institutional investors to fund the loans it approves. As interest rates get hiked, there are fewer borrowers looking for loans, and the rate of defaulting on a loan naturally goes up. That makes it harder to approve loans, which impedes Pagaya's business.
This has all been playing out as expected, but the company still posted formidable performance in the 2023 first quarter. Revenue growth decelerated, but it still increased 9% over last year, with network volume up 12%. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $2 million, down from $4.4 million last year. That was attributed to its acquisition of home-buying company Darwin. Net loss was $61 million, worse than $25 million last year. Adjusted net loss was $11 million, which mostly accounts for share-based compensation.
Source Fool.com
