Pagaya plunges 60% into pre-market trading

The date has come for the lifting of the lock-up that applies to half of the shares in Israeli fintech company Pagaya Technologies (Nasdaq:PGY) owned by its founders, shareholders whose ownership dates back to time that the company was privately owned, and the SPAC it merged with. The company’s stock price responded with a 60% drop in pre-market trading on Nasdaq. Meanwhile, the company has filed a shelf prospectus with the U.S. Securities and Exchange Commission for a shareholder offer to sell.

Pagaya provides financial firms with AI and big data-based technology intended to facilitate more accurate allocation of credit to customers. The company went public in June when it completed a merger with a US SPAC for a valuation of $8.5 billion.

Despite the sharp decline in financial markets in the period between the signing of the SPAC merger agreement about a year ago and the closing of the deal three months ago, the company’s valuation was not lowered and most SPAC investors chose to their investments rather than participating in the merger.

After a negative trend in the stock in its first few weeks of public trading, the trend changed suddenly and inexplicably, and over several consecutive days the price rocketed and rose more than tenfold within two weeks. For a short time, Pagaya was actually Israel’s most valuable company. It was estimated that this was a case of short squeeze: Since the float in Pagaya’s stock is very small, short sellers struggled to hedge their positions, pushing the stock price up.

Although the trend has reversed and the share price has fallen significantly since its peak, the strong gains in July were enough to exceed the threshold set in the bidding documents, so that instead of locking in the holdings of interested parties for six to twelve months the lifting of the lock-up was brought forward. As mentioned, half of the shares will be released today; the rest will be released on December 19.

Published by Globes, Israel business news – – on September 20, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

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