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.
How to Play Pagaya Stock as It Remains Resilient Through Cycles?
Read MoreHide Full Article
Key Takeaways
Pagaya shows resilience across credit cycles with AI underwriting and a broad capital network.
The company posted three straight quarters of positive GAAP net income with 10.5% volume growth.
Pagaya expects $10.5-$10.75B in 2025 network volume as funding diversification supports results.
Pagaya Technologies (PGY - Free Report) has become one of the more stable fintech players in a market still dealing with high interest rates, changing credit conditions and uneven consumer spending. Its artificial intelligence (AI)-based underwriting and broad capital network give it the flexibility to perform well in different parts of the credit cycle, whether conditions are tight or improving.
Because Pagaya does not hold loans on its own balance sheet, it acts mainly as a technology and data platform that connects lenders with institutional investors. This model allows the company to grow loan volumes while keeping its credit risks low, helping it stay resilient even when consumer-credit pressures rise.
If we look to play PGY’s cycle-resilient story, the key is to focus on the company’s ability to expand its partner network, grow funding capacity and maintain credit performance visibility.
Thus, despite macroeconomic headwinds and regulatory risks, Pagaya’s improving credit trends and funding diversification have supported its robust results so far in 2025. The company posted three consecutive quarters of positive GAAP net income this year, a dramatic turnaround from substantial losses in the previous years. In the nine months ended Sept. 30, 2025, its year-over-year network volume growth was 10.5%, a trend the company is expected to sustain in the near term. For 2025, PGY expects network volume of $10.5-$10.75 billion.
Driven by the impressive performance, PGY shares have skyrocketed 167.3% so far this year, significantly outperforming the industry and the S&P 500 Index’s 4.2% decline and 18.7% growth, respectively. The company has also fared better than its two close peers, LendingTree (TREE - Free Report) and LendingClub (LC - Free Report) . LendingTree’s shares have jumped 41.6%, while the LendingClub stock has gained 18.7% year to date.
YTD Price Performance
Image Source: Zacks Investment Research
Now, given Pagaya’s robust performance, investors must be tempted to buy the stock immediately. But, before making any investment decision, it is better to have a detailed understanding of PGY’s fundamental strength.
Pagaya’s Positives to Note:
Diversified Business Model: PGY’s core strength lies in its resilient and adaptable business model. The company has continuously been expanding beyond its original focus on personal loans, moving into auto lending and point-of-sale financing. This diversification reduces exposure to cyclical risks 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 securities (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 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.
Lean Balance Sheet: 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 the company’s robust network of institutional funding partners and a 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.
Comparing PGY’s Business Model With TREE & LC
Unlike PGY, LendingTree is a marketplace platform, not a lender. It matches consumers with financial product providers like mortgages, personal loans, credit cards and insurance.
LendingTree does not underwrite, originate or hold loans. Hence, its balance sheet is not credit-heavy. TREE’s balance sheet is detached from revenue generation. The company is primarily structured to support a fee-based digital marketplace, not balance sheet lending.
Similarly, unlike PGY, LendingClub uses a hybrid model. It originates consumer loans and keeps a portion on its own balance sheet while selling the rest to investors. This gives LendingClub more direct exposure to interest-rate and credit cycles but also greater control over pricing and loan mix.
Analyzing Pagaya’s Valuation
In terms of valuation, the PGY stock looks inexpensive compared with the industry at large. The stock is trading at a forward 12-month price/sales (P/S) ratio of 1.29X, below the industry average of 3.35X over the last three years.
Price-to-Sales F12M
Image Source: Zacks Investment Research
How to Approach the Pagaya Stock Now?
Given its strong year-to-date performance, resilient business model and capital-efficient funding strategy, PGY stands out in the fintech space. Its AI-driven platform, diversified revenue streams and reliance on forward flow agreements shield it from market volatility and credit risks.
However, the company has been witnessing a persistent increase in expenses over the past few years. Over the last three years (2021-2024), total costs and operating expenses increased at a compound annual growth rate of 26.2%. The uptrend continued in the first nine months of 2025, mainly because of elevated production costs.
Nevertheless, analysts seem optimistic regarding PGY’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for Pagaya’s 2025 and 2026 earnings has been revised upward to $3.10 and $3.41 per share, respectively. The estimated numbers indicate year-over-year growth rates of 273.5% and 10% for 2025 and 2026, respectively.
PGY’s Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
Also, the Zacks Consensus Estimate for the company’s 2025 and 2026 revenues, pegged at $1.32 billion and $1.57 billion, respectively, implies year-over-year growth of 28.4% and 19.2%.
PGY’s Sales Estimates
Image Source: Zacks Investment Research
Thus, with accelerating earnings and revenue estimates, along with bullish analyst sentiments, PGY is well-positioned for continued growth. Moreover, the stock trades at a discount relative to the industry at large, making its valuation attractive. For investors seeking exposure to a high-growth, tech-enabled lender with solid fundamentals, the PGY stock is a compelling buy.
Image: Bigstock
How to Play Pagaya Stock as It Remains Resilient Through Cycles?
Key Takeaways
Pagaya Technologies (PGY - Free Report) has become one of the more stable fintech players in a market still dealing with high interest rates, changing credit conditions and uneven consumer spending. Its artificial intelligence (AI)-based underwriting and broad capital network give it the flexibility to perform well in different parts of the credit cycle, whether conditions are tight or improving.
Because Pagaya does not hold loans on its own balance sheet, it acts mainly as a technology and data platform that connects lenders with institutional investors. This model allows the company to grow loan volumes while keeping its credit risks low, helping it stay resilient even when consumer-credit pressures rise.
If we look to play PGY’s cycle-resilient story, the key is to focus on the company’s ability to expand its partner network, grow funding capacity and maintain credit performance visibility.
Thus, despite macroeconomic headwinds and regulatory risks, Pagaya’s improving credit trends and funding diversification have supported its robust results so far in 2025. The company posted three consecutive quarters of positive GAAP net income this year, a dramatic turnaround from substantial losses in the previous years. In the nine months ended Sept. 30, 2025, its year-over-year network volume growth was 10.5%, a trend the company is expected to sustain in the near term. For 2025, PGY expects network volume of $10.5-$10.75 billion.
Driven by the impressive performance, PGY shares have skyrocketed 167.3% so far this year, significantly outperforming the industry and the S&P 500 Index’s 4.2% decline and 18.7% growth, respectively. The company has also fared better than its two close peers, LendingTree (TREE - Free Report) and LendingClub (LC - Free Report) . LendingTree’s shares have jumped 41.6%, while the LendingClub stock has gained 18.7% year to date.
YTD Price Performance
Image Source: Zacks Investment Research
Now, given Pagaya’s robust performance, investors must be tempted to buy the stock immediately. But, before making any investment decision, it is better to have a detailed understanding of PGY’s fundamental strength.
Pagaya’s Positives to Note:
Diversified Business Model: PGY’s core strength lies in its resilient and adaptable business model. The company has continuously been expanding beyond its original focus on personal loans, moving into auto lending and point-of-sale financing. This diversification reduces exposure to cyclical risks 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 securities (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 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.
Lean Balance Sheet: 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 the company’s robust network of institutional funding partners and a 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.
Comparing PGY’s Business Model With TREE & LC
Unlike PGY, LendingTree is a marketplace platform, not a lender. It matches consumers with financial product providers like mortgages, personal loans, credit cards and insurance.
LendingTree does not underwrite, originate or hold loans. Hence, its balance sheet is not credit-heavy. TREE’s balance sheet is detached from revenue generation. The company is primarily structured to support a fee-based digital marketplace, not balance sheet lending.
Similarly, unlike PGY, LendingClub uses a hybrid model. It originates consumer loans and keeps a portion on its own balance sheet while selling the rest to investors. This gives LendingClub more direct exposure to interest-rate and credit cycles but also greater control over pricing and loan mix.
Analyzing Pagaya’s Valuation
In terms of valuation, the PGY stock looks inexpensive compared with the industry at large. The stock is trading at a forward 12-month price/sales (P/S) ratio of 1.29X, below the industry average of 3.35X over the last three years.
Price-to-Sales F12M
Image Source: Zacks Investment Research
How to Approach the Pagaya Stock Now?
Given its strong year-to-date performance, resilient business model and capital-efficient funding strategy, PGY stands out in the fintech space. Its AI-driven platform, diversified revenue streams and reliance on forward flow agreements shield it from market volatility and credit risks.
However, the company has been witnessing a persistent increase in expenses over the past few years. Over the last three years (2021-2024), total costs and operating expenses increased at a compound annual growth rate of 26.2%. The uptrend continued in the first nine months of 2025, mainly because of elevated production costs.
Nevertheless, analysts seem optimistic regarding PGY’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for Pagaya’s 2025 and 2026 earnings has been revised upward to $3.10 and $3.41 per share, respectively. The estimated numbers indicate year-over-year growth rates of 273.5% and 10% for 2025 and 2026, respectively.
PGY’s Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
Also, the Zacks Consensus Estimate for the company’s 2025 and 2026 revenues, pegged at $1.32 billion and $1.57 billion, respectively, implies year-over-year growth of 28.4% and 19.2%.
PGY’s Sales Estimates
Image Source: Zacks Investment Research
Thus, with accelerating earnings and revenue estimates, along with bullish analyst sentiments, PGY is well-positioned for continued growth. Moreover, the stock trades at a discount relative to the industry at large, making its valuation attractive. For investors seeking exposure to a high-growth, tech-enabled lender with solid fundamentals, the PGY stock is a compelling buy.
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.