Pagaya Stock Sinks 25% in Early Trade Despite Record Profit

Pagaya Technologies delivered another profitable quarter, but Wall Street wasn’t impressed. The Israel-based AI fintech reported fourth-quarter revenue of $335 million, up 20% from a year earlier, alongside record GAAP net income of $34 million and a 53% jump in adjusted EBITDA. Yet the results came in just short of expectations, and cautious guidance for 2026 raised concerns about slowing growth and tighter credit conditions, sending shares sharply lower in early trading.

Shares of Pagaya Technologies Ltd. plunged more than 25% in early Nasdaq trading on Monday, wiping out nearly a quarter of the company’s market value, even as the fintech firm reported record profitability, double-digit revenue growth, and upbeat guidance for 2026.

Pagaya stock fell to around $13.9 shortly after the market opened, down from a previous close of $18.64, marking one of its sharpest single-day declines in over a year. Trading volume surged well above normal levels, underscoring the intensity of the sell-off as investors digested the company’s fourth-quarter earnings and forward outlook.

The move came after Pagaya reported a strong set of fourth-quarter and full-year 2025 results, highlighting a return to sustained profitability after years of heavy investment. The disconnect between fundamentals and price action has raised questions about whether the market was positioned too optimistically heading into earnings.

For the fourth quarter, Pagaya posted GAAP net income of $34 million, representing a $272 million improvement from the prior year, driven by revenue growth, lower operating expenses, and normalized credit impairments. Adjusted EBITDA climbed to $98 million, up 53% year over year, as operating leverage improved across the platform.

Total revenue and other income reached $335 million for the quarter, a 20% annual increase, while network volume rose to $2.7 billion. The company said improved economics in its personal loan and auto businesses helped lift revenue from fees less production costs to $131 million.

Despite those gains, investors appeared focused on expectations rather than headline profitability. Pagaya’s first-quarter 2026 guidance called for GAAP net income between $15 million and $35 million, alongside adjusted EBITDA of $80 million to $95 million, a range that some traders viewed as conservative following a blockbuster finish to 2025.

For the full year, Pagaya guided toward GAAP net income of $100 million to $150 million on revenue of $1.4 billion to $1.575 billion, with network volume projected between $11.25 billion and $13 billion. While those figures point to continued expansion, the wide ranges introduced uncertainty around execution and credit conditions.

Full-year 2025 results showed how far the company has come. Pagaya generated $81 million in GAAP net income, up $483 million year over year, as total revenue surged 26% to $1.3 billion. Adjusted EBITDA rose to $371 million, benefiting from scale efficiencies and stronger performance across core asset classes.

The company also emphasized its growing institutional footprint, raising $8.5 billion in asset-backed securities during 2025 and expanding forward-flow agreements across personal loans, auto, and point-of-sale financing. Management framed these moves as key to building more predictable funding capacity while controlling credit risk.

Still, Pagaya’s stock carries elevated volatility. With a five-year beta near 6, the shares are highly sensitive to shifts in sentiment, particularly around interest rates, credit quality, and fintech valuations. Monday’s sell-off suggests traders may be reassessing risk exposure rather than the company’s underlying trajectory.

At its intraday lows, Pagaya’s market capitalization dipped close to $1.1 billion, far below levels implied by analyst targets that stretch above $38. Whether the earnings-driven plunge proves to be a temporary reset or a longer-lasting rerating may depend on how quickly the company converts its profitability momentum into steadier, more predictable growth.

Pagaya will provide further clarity during its earnings call, where management is expected to address investor concerns around guidance, credit normalization, and how aggressively the company plans to scale in 2026. Full financial details are available via the company’s results announcement released through Business Wire.