Pagaya party comes to crashing halt
The Israeli fintech company has lost over 92% of its valuation in less than two months, leaving it with a market cap of $1.5 billion
Less than two months after peaking at a valuation of around $20 billion, Israeli fintech company Pagaya truly returned back down to earth on Tuesday after its shares plummeted by 67%, leaving it with a market cap of $1.5 billion.
The surge in the stock never seemed sustainable and it has lost over 92% of its value since peaking at the beginning of August. Pagaya went public on Nasdaq at an $8.5 billion valuation via a SPAC merger in June, but its shares quickly plummeted and the company found itself trading at a valuation of around $2 billion. That market cap seemed far more reasonable than its very generous original valuation, but beginning on July 20, when it became apparent that there are fewer than one million Pagaya shares publicly available, the company began suffering from what is known as the “GameStop Syndrome”, with a herd of speculators identified the opportunity to dramatically affect the stock price due to its low liquidity.
However, the company submitted a regulatory filing to sell up to 46.1 million shares, and potentially as much as 674 million shares, on Tuesday, which had been previously locked up, meaning shares are set to flood the market and crash the price.
Pagaya’s results, announced last month, were far from disappointing, with its network volume increasing 79% to $1.9 billion in the second quarter. Total revenue and other income increased 83% to $181.5 million, while net loss attributable to Pagaya shareholders reached $146.3 million and was impacted by share-based compensation of $146 million. The company said that it expects its network volume for the entire 2022 to range between $7.2 billion and $7.8 billion, while total revenue is expected to range between $700 million and $725 million. Adjusted EBITDA is expected to range between negative $20 million and positive $10 million, but Pagaya’s share price was always likely to drop regardless of its results.