Why Pagaya’s shares just rocketed 32% in two days
Preliminary Q2 earnings smash guidance, boosting market cap to $2.36B.
In a quarter when broader markets have traded sideways, shares in Pagaya Technologies have staged a dramatic comeback, surging 247% over the last three months and jumping more than 32% in just the final two trading days of last week alone. The sharp rise has pushed Pagaya’s market capitalization to around $2.36 billion.
Founded in 2016, Pagaya has carved out a niche with a proprietary algorithm designed to re-underwrite consumer loans that U.S. financial institutions have turned down. The technology aims to extend access to credit for overlooked borrowers while offering lending partners an additional tool to manage risk and reduce default rates. The promise of this dual benefit helped propel Pagaya to an $8.5 billion valuation when it went public on Nasdaq in June 2022, but the subsequent tightening of financial conditions put that optimism to the test.
This year, however, the company appears to be delivering on its core pitch. Last week, Pagaya announced preliminary second-quarter results well ahead of its own guidance: revenues are now expected to reach $326 million, exceeding the previous range of $290 million to $310 million, while net income is projected at $17 million, 70% higher than its upper guidance of $10 million.
“Our second-quarter results reflect continued strong execution across our network, with a focus on consistent and profitable growth,” said CFO Evangelos Perros in a statement.
Much of the renewed investor appetite can be traced to Pagaya’s recent inclusion in multiple Russell growth indices, a milestone that likely bolstered its visibility among institutional investors and index funds. Such inclusions often force funds tracking the indices to add a stock, generating new demand and momentum that can amplify upward moves. In Pagaya’s case, that dynamic has been dramatic: while the broader market has posted a respectable 15% annual gain, Pagaya’s triple-digit rise stands out as an outlier.
Still, the company faces tests ahead. Its model, giving rejected loans a second life, remains subject to the broader credit cycle and consumer resilience. Investors will be watching closely when Pagaya publishes its final second-quarter results on August 7 for clearer signs of whether its growing loan volume and top-line expansion can translate into durable profit margins.
