Upstart Holdings (UPST -6.26%) has been affected greatly by the rising interest rates and less favorable economic conditions. But one lesser known artificial intelligence (AI)-based company, Pagaya Technologies (PGY -1.40%) is managing to perform better despite the same issues. This company could potentially offer an impressive 249% upside if Wall Street can get on board.
Pagaya operates an AI-based platform which assesses a borrower’s credit risk and grants loans to potential candidates from their statistics. The company works with many credible partners such as Visa, Ally, and SoFi Technologies, and they receive fees both when giving out loans and when selling loans to investors. With the help of AI, Pagaya is quickly able to match investor’s desired rate of return with appropriate loans. The company has been expanding rapidly with six new credit partners added to their platform in 2022, and the network volume has grown to $1.85 billion with no additional contributions.
Comparing it to Upstart, it is evident that Pagaya is outperforming. Upstart’s revenue was down 67%, lending volume fell 78%, and the company as a whole posted a net loss of $129 million. On the other hand, Pagaya’s revenue increased by 9% and their EBITDA was above forecast at $2 million. To make things better, Pagaya has become the top issuer of personal loan asset-backed securities in the US ahead of Upstart, SoFi, and many other fintech platforms.
Pagaya has estimated a potential market of $5 trillion with them taking less than 1%, and this company is still only in its infancy. In order to sustain this impressive growth, Pagaya is not hesitating to make investments such as its recent acquisition of Darwin, a single-family rental property management service.
At the moment, there are only five Wall Street analysts covering the stock with the price target reaching up to 249% more than today’s price. Since the stock is trading at a price-to-sales ratio of 1, this could be an attractive option for risk-tolerant investors, although potential investors should be aware of the risks concerning losses and interest rate risks.
Pagaya Technologies is a leading AI-based financial technology company that provides businesses and investors with solutions for accurately assessing credit risk and generating loans with the help of its AI-driven platform. The company is led by CEO and Co-founder, Gal Barak, who together with CFO Ben Feingold, CTO Oren Klinger and VP of Business Development Gaby Lichtman, are committed to bringing innovative financial solutions to businesses and individuals alike.
In summary, Pagaya Technologies is nearing the long-term potential according to Wall Street and could provide significant upside off the back of its strong AI-driven platform. With proper risk management, this company offers plenty of opportunities for risk-tolerant investors.
