Will Pagaya Be Able to Sustain Its Robust 1H25 Performance?

Pagaya Technologies Ltd. PGY delivered a strong first half of 2025, marked by two consecutive quarters of positive GAAP net income. This represented a dramatic turnaround from the substantial losses experienced in the previous years. PGY, which is one of the most compelling fintech companies in today’s market, posted GAAP net income of $24.5 million in the six months ended June 30, 2025, against a net loss of $96 million in the prior-year period.

Total revenues and other income were $616.4 million, reflecting a 24.4% year-over-year increase. Strong network volume growth, improved monetization, better operating leverage and solid credit discipline, supported by an improvement in capital structure, drove the company’s robust results this year. PGY was able to move into profitability as it avoided overexposure to credit risk and controlled expenses efficiently.

The solid first-half results made PGY raise its revenue guidance for the year. The company now expects 2025 total revenues and other income to be between $1.25 billion and $1.325 billion, up from the previous guidance of $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.

While this kind of growth is eye-catching, the bigger question is whether it can last.

Although macroeconomic headwinds and regulatory risks prevail, Pagaya’s growth looks encouraging, given its improving credit trends and funding diversification (more forward flow deals and ABS issuance, which gives it flexibility and reduces dependence on any single funding source), along with its cost discipline.

Analyzing 1H25 Performance of PGY’s Competitors

LendingTree TREE posted a net loss of $3.5 million in the first half of 2025 against a net income of $8.8 million in the prior-year period. Following a loss in the first quarter, the company achieved a profit in the second quarter, indicating operational recovery.

LendingTree’s revenues grew 29.6% year over year to $489.8 million in the six months ended June 30, 2025. While the insurance segment continued to be the major growth driver for LendingTree, home and consumer segments also showed resilience.

LendingClub LC posted net income of $49.8 million, up 83.6% year over year. Its net revenues grew 26.7% year over year to $466.1 million in the first half of 2025. In both quarters of the year, LendingClub’s loan originations grew significantly, which drove revenues and scale.

The combination of higher originations, better pricing and increased balance sheet scale translated into robust top-line growth for LendingClub.

PGY’s Price Performance, Valuation & Estimate Analysis

Investors are bullish on the PGY stock, which has skyrocketed 305.4% so far this year, outperforming the industry’s 9.5% growth.

Pagaya stock is currently trading at a 12-month forward price-to-sales (P/S) of 1.97X, which is below the industry average of 3.74X.

Over the past 60 days, the Zacks Consensus Estimate for PGY’s 2025 and 2026 earnings has moved higher to $2.65 and $3.43, respectively. The consensus estimate indicates 219.3% and 29.3% year-over-year growth for 2025 and 2026, respectively.

Currently, Pagaya carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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