Stock Analysis & Ideas

Is Pagaya Technologies Turning into a Meme Stock?

Story Highlights

Shares of fintech company Pagaya Technologies have been highly volatile recently, with speculative traders taking advantage of the low float to manipulate the stock price. While the company’s business model seems interesting, investors should be cautious as the stock seems to be a possible short squeeze candidate.

Shares of fintech company Pagaya Technologies (NASDAQ: PGY) continue to be extremely volatile. The stock soared 38.1% on July 29, Friday, following a decline of 18.2% on the previous day. Overall, the stock has surged nearly 476% over the past month. There has been no major news explaining the significant movements in Pagaya stock. The stock seems to be trading like a meme stock, which is a term used to describe stocks that witness unusual trading activity not because of the company’s performance but due to growing interest online and on social media.

Pagaya stock has been gaining some attention on Twitter (TWTR) and the Reddit website. The stock has a very low float (which implies that only a small percentage of shares are publicly traded), which makes it a possible candidate for a short squeeze.

An Interesting Fintech Play

Israel-based Pagaya uses Artificial Intelligence-driven technology, to offer real-time customer credit evaluation to banks and other lenders. The company went public in late June through a merger with special purpose acquisition company (SPAC) EJF Acquisition Corp.

Pagaya has been growing at a phenomenal rate. The company’s revenue exploded 379% to nearly $475 million in 2021. The top-line growth was driven by a 208% rise in the company’s network volume due to the increased penetration of new and existing partners.

Hedge Funds Stay Away from Pagaya

As per the TipRanks’ Hedge Fund Trading Activity Tool, hedge funds decreased their holdings in Pagaya by 1.3 million shares in the last quarter. Overall, the Hedge Fund Confidence Signal for Pagaya is Very Negative based on the activity of eight hedge funds in the last quarter.

Conclusion

Pagaya stock continues to be highly volatile. Due to its low float, it is an easy target for price manipulation. It will be prudent for risk-averse investors to currently stay away from the stock due to its meme stock-like movement.

As per TipRanks Smart Score System, Pagaya scores a one out of 10, which indicates that the stock could underperform the broader market.

Disclosure 

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