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This Month's Exclusive Content
This AI Lender Has Big Upside Potential—And Big RisksAuthored by Peter Frank. Originally Published: 4/19/2026. 
Key Points
- Pagaya connects lenders and investors using AI to expand credit access without holding loans on its balance sheet.
- The company reached profitability in 2025, marking a major shift after years of losses.
- Analysts see around 133% upside, but the stock remains highly volatile and sensitive to credit markets.
- Special Report: Elon Musk’s $1 Quadrillion AI IPO
Take a company that blends fintech, artificial intelligence (AI), consumer lending, and asset-backed securities (ABS), and investors can expect volatility. Pagaya Technologies (NASDAQ: PGY) has proven just that. Last year, the company—which has dual headquarters in New York and Tel Aviv—posted its first annual profit since going public in June 2022. Revenue grew 26%, prompting analysts to point to more than 100% upside potential from current prices. Yet the stock has fallen by roughly two-thirds since September and about 30% this year.
Liberation Day wiped over $2 trillion from markets in a single day. Then a 90-day tariff pause added $4 trillion back to the S&P 500. Trump's AI initiatives sent Palantir up over 140%. Trader Larry Benedict says all of that was just the warm-up.
Benedict is calling what comes next 'Project 2026' - a move he believes could send billions, potentially trillions, into overlooked corners of the market. He's identified one ticker sitting at the center of it all, and he's revealing the name today at no cost. Larry is calling it "Project 2026."
The plunge in share price doesn’t necessarily signal a broken business. Instead, it is almost expected for a high-risk, high-reward fintech operating in an uncertain market. For investors willing to ride the volatility, the gap between today’s share price and analysts’ targets is hard to ignore. How Pagaya’s AI-Driven Model WorksPagaya is not a bank or a traditional lender. It operates an AI-powered network that sits between lenders and the institutional investors who buy consumer loan packages in the form of ABS. When a borrower applies for a personal loan, auto financing, or point-of-sale credit through one of Pagaya’s partners and isn’t approved by the partner lender, Pagaya’s AI evaluates the application. If accepted, the loan is routed into a securitization that Pagaya structures and sells to investors. Rather than holding the credit risk on its balance sheet, Pagaya earns a fee for each loan it moves along. Overall, the platform has evaluated more than $3.5 trillion in loan applications since its founding and sold over $34 billion in personal loan ABS. Financial Performance Shows a Turning PointSince its founding in 2016, Pagaya pursued aggressive growth at the expense of profitability. That changed last year. The company swung from a $401 million loss in 2024 to an $81 million profit in 2025. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 76% to $371 million. Revenue increased 26% to $1.3 billion, and network volume—the total of loans flowing through the platform—grew 9% to $10.5 billion. Both results were aided by the company’s expansion into auto and point-of-sale originations alongside personal loans. Q4 2025 was particularly strong. Fourth-quarter revenue and other income rose 20% year-over-year to $335 million. GAAP net income of $34 million was a quarterly record and at the high end of Pagaya’s guidance. Earnings per share came in at $0.80, comfortably above analysts' forecasts of $0.75 per share. For 2026, management expects network volume to increase from $11.25 billion to $13 billion. Revenue is projected between $1.4 billion and $1.575 billion, suggesting another year of solid growth. GAAP net income is forecast at $100 million to $150 million. Pagaya's Stock Volatility Tells a Fintech StoryThe share-price trajectory has mirrored that of many fintech peers. After an initial surge at its IPO in 2022, Pagaya’s shares plunged, prompting a 1-for-12 reverse stock split in 2024 to help boost the share price. In 2025, shares rebounded, rising roughly fourfold through September when PGY hit a 52-week high near $45. This year, however, the stock has fallen about one-third year-to-date and more than 45% since a recent January high. Despite the volatility, most analysts remain optimistic. Of the 12 analysts covering the stock, 10 rate it a Buy and two rate it a Hold. The consensus is a Moderate Buy with an average target of $33.11 — roughly 130% above current levels. Risks Center on Credit Markets and CompetitionSkepticism is understandable. Pagaya’s model depends on institutional investors’ appetite for ABS and lending partners continuing to route applications through its network. A disruption in capital markets or a spike in consumer loan defaults could materially reduce both channels. So far this year, the capital markets side has remained healthy. In April, Pagaya closed an $800 million consumer loan ABS sale and completed its first auto ABS of the year. The consumer loan offering was increased by 33% due to strong institutional demand, the company said. It’s also worth noting that, with sizable equity-based compensation, insider selling has been recorded in SEC filings following the 2025 run-up. Pagaya does not pay a dividend, so investors are primarily betting on future growth. Competition from banks building in-house AI credit models and rival platforms could quickly pressure Pagaya’s results. A High-Risk Bet With Meaningful Upside PotentialPagaya is not a stock for conservative investors. The volatility is likely to continue, and one down credit cycle with the financial sector pulling back could substantially dampen results. But for investors with a higher risk tolerance who believe AI-driven consumer lending is an enduring growth story, Pagaya’s first-year profitability, strong 2026 guidance, active ABS issuance, and a stock trading far below analyst targets are compelling factors. These developments make the company worth serious consideration. The company appears to have turned a corner; whether the stock follows remains to be seen. |
