Israeli fintech firm Pagaya is in trouble as its market cap is dropping by the hour. The newly publicly traded company’s stock has been sliding for days now and the holiday weekend did not seem to help it stem the tide.
The company’s shares began trading last week at $7, but as of Tuesday morning, they are in jeopardy of plummeting below the $4 mark. (American markets were closed on Monday for the 4th of July holiday). That would mean a loss of more than 40% of Pagaya’s value.
And Pagaya is now down to a valuation of well under $3 billion when it first looked to hold an IPO the company expected a valuation of as much as $8.5 billion.
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The newly listed public company is called Pagaya Technologies Ltd. and its Class A ordinary shares and public warrants began trading on the NASDAQ stock market on June 23, 2022 under the ticker symbols “PGY.”
The fall in value is largely due to the current instability in the markets in general. The markets are down everywhere, largely due to the world financial turmoil that resulted from the Russian invasion of Ukraine feeding into high inflation everywhere and the U.S. Federal Reserve raising interest rates. Stock markets and bond markets are negatively correlated in that when interest rates rise, stocks go down. This is because bonds, which are usually a safer investment, offer higher yields so investors sell stock to buy them. It is also because higher interest rates mean growth costs more so investors expect lower profits and possible contraction.
And the Pagaya news comes soon after eToro, an Israeli startup that offers its clients a trading platform, scrapped its planned IPO. That company will instead try to raise another $1 billion in new funding. The company now expects to have just a $5 – 6 billion valuation, whereas, it originally anticipated more than a $10 billion valuation from its IPO.
Founded in 2016 by CEO Gal Krubiner, Yahav Yulzari – a former Israeli soccer star — Avital Pardo and CEO Gal Krubiner, Pagaya Investments is a global financial technology company with new ways to handle institutional asset management. Focusing on fixed income and alternative credit, the company offers a variety of discretionary funds to institutional investors (including pension funds and sovereign wealth funds), insurance companies and banks. It boasts a suite of “unmatched artificial intelligence technologies and state-of-the-art algorithms delivers an exceptional, scalable performance edge in the digital lending space.”