Pagaya Technologies (NasdaqCM:PGY): Assessing Valuation After Record Q2 Growth and Upgraded Full-Year Outlook

Pagaya Technologies (NasdaqCM:PGY) just reported record revenue growth and solid profitability for its second quarter of 2025, alongside a bump in lending volume. Investors were watching closely as Pagaya also raised its full-year outlook, which the company credits to the strength and flexibility of its AI-powered fintech platform. With these results highlighting Pagaya’s differentiated edge, it is no surprise the report quickly caught the market's attention and may have nudged the minds of investors evaluating what comes next for the stock.

This latest earnings catalyst is set against an eventful backdrop for Pagaya. After some ups and downs in prior years, the company’s shares have posted a sharp rally this year, rising around 147% over the past twelve months and up over 250% year-to-date. That momentum has accelerated even more in the past three months, nearly doubling during that period. These gains suggest shifting sentiment, as investors reassess Pagaya's long-term growth prospects following its strong quarterly results and improved outlook.

With all this action in the rearview mirror, the big question now is whether Pagaya is still undervalued, or if the market has already priced in all of the future growth that recent results seem to promise.

Most Popular Narrative: 90% Undervalued

According to the narrative from yyzjons, Pagaya is calculated to be significantly undervalued based on projected growth in its core business areas and a high discount rate. This view positions the current fair value much higher than the present market price.

"Assuming Pagaya continues to innovate and capture a larger share of this market, its revenue could grow at a compound annual growth rate (CAGR) of 30% to 40% over the next 5 years, driven by strong demand for its AI-powered underwriting platform. Expansion into international markets and verticals could increase Pagaya’s addressable market by an estimated 20% to 40% in the next 5 years, further accelerating revenue growth."

If you want to see what’s fueling this projection, look past the headline numbers. Behind this sky-high fair value is an aggressive blueprint, featuring bold revenue forecasts, expanding margins, and disruptive expansion moves. Curious which assumptions cause such a massive discount? You’ll need to see the full narrative to discover which hidden levers may propel Pagaya’s valuation higher.

Result: Fair Value of $34.05 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slower industry AI adoption or tighter regulation could quickly challenge this bullish case and potentially halt Pagaya’s growth trajectory.

Find out about the key risks to this Pagaya Technologies narrative.

Another View: Cash Flow Analysis Tells the Story

Looking through a different lens, our DCF model also finds Pagaya trading below its underlying value. This reinforces the previous story. But does this cash flow approach capture all the potential, or are both methods missing something?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Pagaya Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Pagaya Technologies Narrative

If you see things differently or prefer to dig into the numbers on your own, you can put together your own perspective in just a few minutes. do it your way.

A great starting point for your Pagaya Technologies research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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