Why Pagaya Technologies Plummeted by 74% This Week
Pagaya Technologies (NASDAQ: PGY), one of the more intriguing and unusual operators in the fintech space, lost its appeal to many investors this week. This was due largely to the toxic combination of a Federal Reserve interest rate hike and a big new secondary share issue. According to data compiled by S&P Global Market Intelligence, Pagaya shares had lost nearly three-quarters of their value across the week's five trading sessions.
Pagaya, which specializes in lending technology powered by artificial intelligence (AI), was understandably a victim of the Fed's latest interest rate boost on Wednesday. Interest rate hikes can badly affect lenders, as the more expensive loans become, the more reluctant would-be clients are to borrow money. Pagaya is not a diversified financial services business, and as such it's relatively more exposed to big changes in the lending landscape.
Given that, it didn't qualify as good timing when the company filed a preliminary prospectus for secondary stock issues the day before the interest rate increase.
Source Fool.com
