Inexpensive Shares Soaring in 2021: Could They Be the Following Palantir?
Article: Pagaya Technologies: A Promising AI-Powered Lending Platform
Pagaya Technologies, an AI-driven lending platform, is making waves in the financial services sector. With a focus on optimizing credit and lending decisions, the company is poised for growth, albeit with some inherent risks typical of scaling companies.
Currently trading around $34, Pagaya's stock is considered undervalued, with analyst price targets averaging about $37.90, indicating a potential 13.8% upside. Some analysts, such as Citigroup, maintain strong buy ratings with a price target of $40, while others, like Oppenheimer, are more cautious with a price target of $25.
Financially, Pagaya has posted losses, with TTM earnings around -$282 million and EPS negative at -3.69. However, revenues are on the rise, reaching TTM revenue of $1.15 billion. The company's gross margin is decent at around 42%, but net margin remains negative. Debt/equity is relatively high at 134%.
Despite the losses, Pagaya's growth prospects are highly rated, earning a 5/6 on Simply Wall St for future growth potential. The market perceives it as bullish, despite some fear indicated by the Fear & Greed Index.
Comparatively, Palantir Technologies, a company in the data analytics market, operates in a much larger addressable market. While both companies leverage AI, Palantir is more broadly focused on data analytics and software for large enterprises and governments across many industries, while Pagaya is more specialized in AI-driven lending and financial services. PGY is also smaller, with a market cap around $2.55 billion and less established profitability than Palantir.
Pagaya's addressable market for personal, auto, and POS loans is over $800 billion. In the second quarter, the company reported net income of $17 million and network volume of $2.6 billion. Pagaya aspires to be the go-to lending technology partner for the consumer finance ecosystem.
In the same quarter, Pagaya reported revenue of $326 million, above the high end of company forecasts. The company has also generated $2.8 billion in ABS deals in 2025. Pagaya's success could potentially resemble that of Palantir, a company with a robust platform and a long growth runway in a niche market.
Investors looking for AI exposure in lending might find Pagaya attractive, but should factor in its current losses and volatility. Pagaya Technologies is a promising up-and-coming stock in the AI-based lending sector, offering solid growth prospects but with risks commensurate with growth companies still scaling revenues and improving profitability.
- Investors interested in AI-based investments might find Pagaya Technologies attractive, as it is a promising up-and-coming stock in the AI-driven lending sector.
- With a focus on optimizing credit and lending decisions, Pagaya Technologies, an AI-powered lending platform, aspires to be the go-to lending technology partner for the consumer finance ecosystem.
- While the company has posted losses and a relatively high debt/equity ratio, Pagaya Technologies' growth prospects are highly rated, and it operates in an addressable market worth over $800 billion for personal, auto, and POS loans.
