Against the background of the stormy trading in its shares in the last month, it published this week Pagaia its results for the second quarter of the year. The Israeli fintech company founded by Gal Krobiner, Yahav Yolzari and Amit Pardo, registered sharp growth of 83% in revenues to 181.5 million dollars, compared to the corresponding quarter last year.
The positive trend was evident in all activity in the first half of the year, and in summary, Pagaya’s revenues stood at 352 million dollars, an increase of 92% compared to the corresponding half of last year. In the bottom line, the company recorded a loss of 146.3 million dollars, which is mainly due to the recording of compensation for employees in the amount of 146 million dollars (accounting loss), this compared to a loss of 5.3 million dollars in the corresponding period last year. With the summary of the half, the loss amounted to 164.6 million dollars compared to a loss of 76.2 million dollars in the corresponding period in 2021.
Despite the loss on the bottom line, Pagaya posted a positive profit before depreciation, taxes and amortization (EBITDA) for the quarter of $4.9 million, and adjusted EBITDA for the first half of $9.3 million.
Waiting for the “release” of the blocked shares
It is not clear how interested the investors in Pagaya shares are in the financial results themselves. The company began trading on Nasdaq with the completion of its merger with the SPAC company last June. Against the background of the paucity of shares available for trading (the shares of the founders and other investors in the company are blocked and cannot be traded at the moment) there was a jump of over 800% in the share price in the last month – which led Pagaya to trade at An imaginary of 14.5 billion dollars. It is widely believed that this is an extreme case of a “short squeeze” in the stock. We note that at this time the stock is being cut by 9% on Wall Street, for a market value of about 13 billion dollars.
The low marketability and the abnormal increase in the stock in the last month, led to the fact that two of the three founders of Fagaia (Krobiner and Yolzeri) already own shares with a paper value of $2.15 billion, while Pardo owns shares worth $3.3 billion.
The value of the holdings will be put to the test after trading in the blocked shares becomes possible – probably already in a few weeks. For this to actually happen, Pagaya shares must trade at a daily price (calculated by weighted trading volume, VWOL), above 12.5 dollars daily for 20 consecutive trading days after the issuance.
According to estimates, during the next week the stock should meet this condition, which is expected to release the “block” at the end of only 90 days from the start of trading, towards the end of this September. In such a case, the founders, as well as other large shareholders (Kel Insurance and the Viola Group) may end up with huge sums if they realize their shares.
Fagaya is engaged in underwriting loans in the US. The company has developed a platform that examines according to hundreds of different criteria how “safe” the borrower is. To this end, it has established a kind of “investment network”, through which the company’s business partners underwrite the loans. The investment network grew in 79% in the second quarter to the extent of 1.9 billion dollars. The company expects that its investment network will grow to a range between 7.2 and 7.7 billion dollars in 2022. This year’s revenues will range from 700 to 725 million dollars and the adjusted EBITDA will range from a loss of 20 million dollars for a profit of 10 million dollars.