We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Pagaya Becomes Profitable: How to Play This Fintech Innovator?
Read MoreHide Full Article
Key Takeaways
Pagaya posted Q2 net income of $16.7M, a sharp reversal from a $74.8M loss a year earlier.
Its 2025 revenue view was raised to $1.25-$1.325B, with net income guided at $55-$75M.
PGY shares have soared 301.1% year to date, far outpacing peers and the broader market.
Pagaya Technologies Ltd. (PGY - Free Report) has achieved profitability in 2025, marking its second consecutive quarter with positive GAAP net income and a dramatic turnaround from substantial losses in the previous years. Driven by its artificial intelligence (AI)-powered lending platform, capital-light business model, diversification efforts and scalable partnerships, PGY, which is one of the most compelling fintech companies in today’s market, posted record GAAP net income of $16.7 million in the second quarter of this year, against a net loss of $74.8 million incurred in the prior-year quarter.
Given the solid results, PGY’s 2025 revenue guidance has been revised higher. The company expects full-year total revenues and other income between $1.25 billion and $1.325 billion, up from the previously mentioned $1.175-$1.3 billion. Its full-year net income guidance is $55-$75 million, a sharp reversal from the $401-million loss incurred in 2023.
Analysts also seem optimistic regarding Pagaya’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for the company’s 2025 and 2026 earnings has been revised upward to $2.65 and $3.43 per share, respectively. The estimated numbers indicate year-over-year growth rates of 219.3% and 29.3% for 2025 and 2026, respectively.
Earnings Estimate Trend
Image Source: Zacks Investment Research
If we look at PGY’s competitors, LendingTree (TREE - Free Report) and LendingClub (LC - Free Report) , both firms posted solid second-quarter results. LendingTree’s adjusted EBITDA increased 35% year over year, fueled by strong revenue growth across all three business segments. LendingClub posted a 33% increase in total revenues, driven by higher marketplace sales and loan pricing, credit outperformance and higher net interest income on a larger balance sheet with lower deposit funding costs.
Now, given Pagaya’s robust performance of late, investors must be tempted to buy the stock. But, before making any investment decision, it is better to have a look at PGY’s fundamentals.
What Is Driving Pagaya’s Success?
Diversified & Resilient Business: PGY’s core strength lies in its resilient and adaptable business model. The company has been actively expanding beyond its original focus on personal loans, moving into auto lending and point-of-sale financing. This diversification reduces exposure to cyclical risk in any single loan category, making the business more stable across economic cycles.
Parallel to this, Pagaya has built a robust network of more than 135 institutional funding partners to support the sale of its asset-backed security (ABS). The company leverages forward flow agreements — structured financing arrangements in which institutional investors commit to purchasing future loan originations from Pagaya’s banking partners. These agreements offer a critical alternative funding source if ABS markets face disruptions during periods of market stress.
PGY has a competitive edge in its proprietary data and product suite. One standout offering is its pre-screen solution, which enables banks and lenders to present pre-approved loan offers to existing customers without requiring a formal application.
By analyzing the lender’s customer base and identifying qualified borrowers proactively, the company helps financial institutions deepen customer relationships and expand credit access with minimal incremental marketing spend. This marks an evolution in its value proposition from driving market share gains for partners to enhancing their share of wallet with existing customers.
Capital-Light Model: Pagaya operates a capital-efficient model that largely avoids holding loans on its balance sheet, significantly reducing its exposure to credit risk and market volatility. This is made possible through a robust network of institutional funding partners and a strategic focus on issuing ABS.
The capital raised in advance is held in trust and deployed only when a lending partner originates a loan through Pagaya’s AI-driven network. At that point, the loan is immediately acquired by a pre-committed funding source, either through an ABS vehicle or a forward flow agreement. As a result, most loans never reside on Pagaya’s balance sheet or only do so briefly before being transferred.
This off-balance-sheet model has proven particularly effective during periods of elevated interest rates and market stress, such as from 2021 through 2023. By minimizing credit exposure and avoiding significant loan write-downs, Pagaya has maintained its financial flexibility in turbulent environments.
PGY appears to rely heavily on forward flow agreements. These contracts provide a reliable and predictable source of capital, helping the company maintain liquidity even amid tightening credit markets and rising inflation.
Analyzing PGY’s Price Performance
So far this year, PGY shares have skyrocketed 301.1%, significantly outperforming the industry and the S&P 500 Index’s 3.6% and 10.8% rallies, respectively. The company’s performance has also been better than that of LendingTree and LendingClub.
LendingTree’s shares have soared 85.3%, while the LendingClub stock has gained 2.5% year to date.
PGY’s YTD Price Performance
Image Source: Zacks Investment Research
A Look at Pagaya’s Current Valuation
In terms of valuation, the PGY stock looks inexpensive. The stock is trading at a forward 12-month price/sales (P/S) ratio of 1.96X, below the industry average of 3.57X. However, Pagaya stock is trading at a premium compared with TREE and LC, which have forward P/S ratios of 0.90X and 1.79X, respectively.
Price-to-Sales F12M
Image Source: Zacks Investment Research
Should You Buy the Pagaya Stock Now?
Since PGY is now a profitable fintech leader with fast-growing revenues, impressive year-to-date performance, resilient business model, capital-efficient funding strategy and strong institutional support, it has become an attractive option for investment and partnerships. Its AI-driven platform, diversified revenue streams and reliance on forward flow agreements shield it from market volatility and credit risks.
Thus, for investors seeking exposure to a high-growth, tech-enabled lender with solid fundamentals, it is a wise idea to add the PGY stock to their portfolio. An attractive valuation and bullish analyst sentiments add another layer of optimism.
Image: Shutterstock
Pagaya Becomes Profitable: How to Play This Fintech Innovator?
Key Takeaways
Pagaya Technologies Ltd. (PGY - Free Report) has achieved profitability in 2025, marking its second consecutive quarter with positive GAAP net income and a dramatic turnaround from substantial losses in the previous years. Driven by its artificial intelligence (AI)-powered lending platform, capital-light business model, diversification efforts and scalable partnerships, PGY, which is one of the most compelling fintech companies in today’s market, posted record GAAP net income of $16.7 million in the second quarter of this year, against a net loss of $74.8 million incurred in the prior-year quarter.
Given the solid results, PGY’s 2025 revenue guidance has been revised higher. The company expects full-year total revenues and other income between $1.25 billion and $1.325 billion, up from the previously mentioned $1.175-$1.3 billion. Its full-year net income guidance is $55-$75 million, a sharp reversal from the $401-million loss incurred in 2023.
Analysts also seem optimistic regarding Pagaya’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for the company’s 2025 and 2026 earnings has been revised upward to $2.65 and $3.43 per share, respectively. The estimated numbers indicate year-over-year growth rates of 219.3% and 29.3% for 2025 and 2026, respectively.
Earnings Estimate Trend
Image Source: Zacks Investment Research
If we look at PGY’s competitors, LendingTree (TREE - Free Report) and LendingClub (LC - Free Report) , both firms posted solid second-quarter results. LendingTree’s adjusted EBITDA increased 35% year over year, fueled by strong revenue growth across all three business segments. LendingClub posted a 33% increase in total revenues, driven by higher marketplace sales and loan pricing, credit outperformance and higher net interest income on a larger balance sheet with lower deposit funding costs.
Now, given Pagaya’s robust performance of late, investors must be tempted to buy the stock. But, before making any investment decision, it is better to have a look at PGY’s fundamentals.
What Is Driving Pagaya’s Success?
Diversified & Resilient Business: PGY’s core strength lies in its resilient and adaptable business model. The company has been actively expanding beyond its original focus on personal loans, moving into auto lending and point-of-sale financing. This diversification reduces exposure to cyclical risk in any single loan category, making the business more stable across economic cycles.
Parallel to this, Pagaya has built a robust network of more than 135 institutional funding partners to support the sale of its asset-backed security (ABS). The company leverages forward flow agreements — structured financing arrangements in which institutional investors commit to purchasing future loan originations from Pagaya’s banking partners. These agreements offer a critical alternative funding source if ABS markets face disruptions during periods of market stress.
PGY has a competitive edge in its proprietary data and product suite. One standout offering is its pre-screen solution, which enables banks and lenders to present pre-approved loan offers to existing customers without requiring a formal application.
By analyzing the lender’s customer base and identifying qualified borrowers proactively, the company helps financial institutions deepen customer relationships and expand credit access with minimal incremental marketing spend. This marks an evolution in its value proposition from driving market share gains for partners to enhancing their share of wallet with existing customers.
Capital-Light Model: Pagaya operates a capital-efficient model that largely avoids holding loans on its balance sheet, significantly reducing its exposure to credit risk and market volatility. This is made possible through a robust network of institutional funding partners and a strategic focus on issuing ABS.
The capital raised in advance is held in trust and deployed only when a lending partner originates a loan through Pagaya’s AI-driven network. At that point, the loan is immediately acquired by a pre-committed funding source, either through an ABS vehicle or a forward flow agreement. As a result, most loans never reside on Pagaya’s balance sheet or only do so briefly before being transferred.
This off-balance-sheet model has proven particularly effective during periods of elevated interest rates and market stress, such as from 2021 through 2023. By minimizing credit exposure and avoiding significant loan write-downs, Pagaya has maintained its financial flexibility in turbulent environments.
PGY appears to rely heavily on forward flow agreements. These contracts provide a reliable and predictable source of capital, helping the company maintain liquidity even amid tightening credit markets and rising inflation.
Analyzing PGY’s Price Performance
So far this year, PGY shares have skyrocketed 301.1%, significantly outperforming the industry and the S&P 500 Index’s 3.6% and 10.8% rallies, respectively. The company’s performance has also been better than that of LendingTree and LendingClub.
LendingTree’s shares have soared 85.3%, while the LendingClub stock has gained 2.5% year to date.
PGY’s YTD Price Performance
Image Source: Zacks Investment Research
A Look at Pagaya’s Current Valuation
In terms of valuation, the PGY stock looks inexpensive. The stock is trading at a forward 12-month price/sales (P/S) ratio of 1.96X, below the industry average of 3.57X. However, Pagaya stock is trading at a premium compared with TREE and LC, which have forward P/S ratios of 0.90X and 1.79X, respectively.
Price-to-Sales F12M
Image Source: Zacks Investment Research
Should You Buy the Pagaya Stock Now?
Since PGY is now a profitable fintech leader with fast-growing revenues, impressive year-to-date performance, resilient business model, capital-efficient funding strategy and strong institutional support, it has become an attractive option for investment and partnerships. Its AI-driven platform, diversified revenue streams and reliance on forward flow agreements shield it from market volatility and credit risks.
Thus, for investors seeking exposure to a high-growth, tech-enabled lender with solid fundamentals, it is a wise idea to add the PGY stock to their portfolio. An attractive valuation and bullish analyst sentiments add another layer of optimism.
At present, Pagaya carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.