Pagaya Technologies Ltd. (PGY): A Bull Case Theory 

We came across a bullish thesis on Pagaya Technologies Ltd. on Capitalist Letter’s Substack by Oguz Erkan. In this article, we will summarize the bulls’ thesis on PGY. Pagaya Technologies Ltd.’s share was trading at $24.13 as of December 1st. PGY’s forward P/E was 7.79 according to Yahoo Finance.

Pagaya is positioned as a transformative player in the alternative lending space, bridging the gap between traditional lenders and investors willing to finance creditworthy borrowers that banks typically reject. Its platform uses AI-driven underwriting to evaluate applications from borderline borrowers, connecting these loans to investors through pre-funded special purpose vehicles, warehouse facilities, and pass-through arrangements. This model allows lenders to approve more clients without taking on additional risk, provides investors access to high-quality subprime loans without performing credit risk themselves, and generates fee revenue for Pagaya, creating a win-win ecosystem.

The company benefits from multi-layered network effects: as more lenders join, investor participation rises, loan volume grows, and the AI underwriting model becomes increasingly effective, reinforcing its competitive advantage. Pagaya’s addressable market is significant, with rejected personal, auto, and point-of-sale loans representing a potential $44 billion in incremental origination volume in the U.S. alone, and substantial opportunities exist for geographic and product expansion. Its track record is impressive, with operating revenues growing 10x over five years, though this rapid expansion came with high leverage and balance sheet exposure to junior tranches of securitized loans, creating material risk if credit performance deteriorates.

Conservative projections suggest that even at a 20% annual growth rate, Pagaya could reach $2.7 billion in revenue and $405 million in net income by 2030, implying a potential threefold upside from the current $2 billion valuation. While systematic and operational risks persist, the company’s durable positioning, multi-touchpoint network effects, and proven growth engine make it a compelling, high-upside investment opportunity, provided investors manage exposure prudently given the inherent balance sheet complexity and credit cycle sensitivity.

Previously we covered a bullish thesis on Pagaya Technologies Ltd. (PGY) by Unconventional Value in February 2025, which highlighted the company’s AI-driven lending platform, expanding access to underserved borrowers, and growing network of lending and investment partners. The company’s stock price has appreciated approximately by 113.35% since our coverage. Oguz Erkan shares a similar thesis but emphasizes network effects, capital structures, and conservative growth projections.

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Disclosure: None.