Why Pagaya Technologies Stock Plummeted by Almost 24% Today
Key Points
Double- and triple-digit growth in its latest quarter wasn't sufficient for many investors.
They were clearly worried about the twin revenue misses.
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Next-generation fintech Pagaya Technologies (NASDAQ: PGY) wasn't exactly looking like the stock of the future on Monday. It posted quarterly results that displeased the market, leading to a share price slide of almost 24%.
Good, but not good enough
Reporting both its fourth-quarter and annual results, Pagaya divulged that it earned $335 million in total revenue and other income for the quarter. This was 20% higher year over year. However, the company's network volume only crept 3% higher, to $2.7 billion.
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As for net income not in accordance with generally accepted accounting principles (GAAP), this rose by almost sixfold to nearly $78.8 million ($0.80 per share).
That double-digit revenue increase wasn't impressive to analysts. Their consensus estimate for the line item was notably higher, at just under $349 million. Yet the company easily beat the non-GAAP (adjusted) net income consensus of $0.35 per share.
The mismatch between top- and bottom-line growth rates and the low network volume growth was due to Pagaya completing its strategic exit from a once-considerable business. This is its single-family rental (SFR) operations, in which it assisted with investments in (and the management of) SFR portfolios.
A miss on top-line guidance, too
Pagaya also proffered guidance for its current (first) quarter and the entirety of 2026.
It believes the quarter's network volume will be flat, or slightly down, sequentially, at $2.5 billion to $2.7 billion. Ditto for revenue and other income, anticipated at $315 million to $335 million. GAAP net income should be $15 million to $35 million.
That revenue projection is below the consensus analyst estimate of $344 million.
As for the year, the anticipated network volume range is $11.25 billion to $13 billion, that for revenue is $1.4 billion to almost $1.58 billion, and the GAAP net income forecast is $100 million to $150 million.
I don't feel the sell-off was justified. Sure, investors dislike when a high-flying company posts relatively weak numbers. In the case of Pagaya, though, this is due in no small part to its strategic shifts. I'd still be a buyer of the stock.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Pagaya Technologies. The Motley Fool has a disclosure policy.
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