Five trading days have passed since the eighth Pagaya It began trading on the NASDAQ, and about two-thirds of the company’s value evaporated in that short period, compared to its merger value to SPAC. In addition, the stock closed at a price that reflects Pagaya’s value of about $ 2.9 billion.
The price of the share in the merger with SPAC was $ 10, but on the first trading day it started trading at $ 7, and on Wednesday the price was about $ 4.3 and today (Thursday) it drops to $ 4, which reflects a value of about $ 2.6 billion. .
Pagaya was founded in 2016 by CEO Gal Krubiner, Chief Technology Officer Avital Pardo and Chief Revenue Officer Yahav Yulzeri. The company has developed technology that enables more accurate information analysis for credit purposes. Mainly through PIPE, the private placement that accompanies the merger) although SPAC investors, most of them, preferred to give up participation in the transaction and get their money back.
The declines in the share price since the start of trading have joined the clear trend of declines in value in a large part of the technology stocks merged with SPAC companies in recent months, including a double-digit number of Israeli companies, all of which are recording negative returns. SPAC companies are inactive companies that raise money in an IPO in order to acquire existing companies. For private companies, merging into SPAC is an alternative way to reach the public market, rather than an initial public offering (IPO).
Investors are tired of the device
The SPAC trend was at its peak on Wall Street in 2020-2021, with hundreds of companies raising huge sums. In many cases, companies that gained a particularly generous value, or that reached the public market when they were not yet suitable for it, merged into them. The result was investor disgust with the instrument, and alongside measures announced by the SEC (US Securities and Exchange Commission), the number of SPAC issues shrank, investor redemption rates (non-participation in a merger transaction) increased and shares reached the market through a merger to SPAC weakened.
Pagaya signed the merger agreement with SPAC last September, after the SPAC market had already cooled down. However, in the months leading up to the completion of the merger, the leading indices in the capital markets declined significantly, and there was a significant change in the tastes of investors, who preferred investing in value companies over growth companies.
In a conversation with Globes last week, just before Pagaya began trading, Krubiner was asked what his expectations were regarding the share price, given the sharp declines in shares merged with SPAC, and replied that “we are not dealing with it. Unfortunately or fortunately, we do not control or schedule the “It’s important to understand that the question is the long term – what will the performance be in 5 years’ time.”