PGY Stock Forecast & Price Target

Pagaya Technologies Ltd demonstrated a significant improvement in its loan conversion rate, achieving 23.9% in 2Q25, up from 15.2% in the same period the previous year, which management attributes to enhancements in its AI-driven credit decisioning engine. The company reported a year-over-year revenue growth of 30% in 2Q25, reflecting a strategy focused on maintaining credit performance rather than prioritizing aggressive growth strategies seen in competitors. Pagaya's approach positions the company favorably within the lending marketplace, leveraging machine learning and advanced analytics to deliver an enhanced customer experience and broader access to credit.

Pagaya Technologies Ltd's stock has experienced a decline in response to concerns raised in a sell-side report highlighting deteriorating credit performance in the lending marketplace, particularly affecting peers like Upstart. The report indicated rising delinquencies in asset-backed securities (ABS) pools associated with Upstart, suggesting that these credit challenges are reflective of broader macroeconomic trends rather than isolated issues. Consequently, the caution surrounding the credit environment, characterized by increasing delinquencies and more lenient borrower approval strategies, raises significant concerns about the stability and performance of Pagaya's business model in a competitive landscape.