Pagaya Technologies Ltd. (PGY): A Bull Case Theory

We came across a bullish thesis on Pagaya Technologies Ltd.  on Stay Invested’s Substack by Denis Gorbunov. In this article, we will summarize the bulls’ thesis on PGY. Pagaya Technologies Ltd. 's share was trading at $39.66 as of September 12th. PGY’s forward P/E was 13.46 according to Yahoo Finance.

Pagaya Technologies (PGY) has emerged as a key disruptor in the credit services industry, reshaping the way lending works by acting as an AI-driven intermediary rather than a traditional originator. Instead of issuing loans directly, Pagaya integrates its platform with 31 partners including SoFi, Klarna, and major U.S. commercial banks, providing a “second look” analysis of rejected applications.

Its machine learning models go beyond FICO scores, using data sets such as income stability, cash flow patterns, payment histories, and education to assess repayment likelihood in real time. Once loans are approved, Pagaya bundles them into asset-backed securities and sells them to its network of 145 institutional investors, earning fees for approvals, structuring, and servicing, while avoiding direct credit risk. The company operates across auto, credit card, personal loan, point-of-sale, and rental markets, giving it wide exposure.

Now profitable with $110 million in free cash flow, $297 million in manageable long-term debt, and revenue growth of 30% YoY, Pagaya’s stock has surged, supported by strong institutional buying from BlackRock, Vanguard, and Citadel. While shareholder dilution has been a concern, the pace has slowed, and fundamentals now justify its $39 price with potential upside to $67 in five years under conservative assumptions.

Risks include regulatory scrutiny over fairness and transparency, potential dilution, and growing competition from Upstart Holdings, which has more lending partners but fewer institutional backers. With 42% of U.S. consumers underserved by traditional credit scoring and Pagaya negotiating with 80% of the top 25 U.S. banks, its growth runway remains significant, offering compelling long-term upside.

Previously we covered a bullish thesis on Pagaya Technologies Ltd. (PGY) by Unconventional Value in February 2025, which highlighted the inefficiencies of traditional credit models and Pagaya’s AI-driven ability to expand credit access to underserved consumers. The company’s stock price has appreciated approximately by 250% since our coverage. This is because the thesis played out. The thesis still stands as Pagaya continues network and product expansion. Denis Gorbunov shares a similar but emphasizes on profitability, institutional demand, and valuation re-rating.

Pagaya Technologies Ltd.  is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held PGY at the end of the first quarter which was 24 in the previous quarter. While we acknowledge the potential of PGY as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.