Pagaya Technologies Ltd. $PGY - Long

4 mars

Today we have on the radar Pagaya Technologies Ltd. PGY

Pagaya Technologies Ltd. is a global financial technology company, headquartered in Tel Aviv, Israel, with operations spanning Israel, the United States, and international markets. Since its establishment in 2016, the company has been at the forefront of development and implementation of exclusive artificial intelligence technology and its corresponding software solutions. These advanced tools play a vital role in supporting partners, such as rapidly growing financial technology firms, traditional banks, financial institutions, auto finance providers, and providers of real estate services, in the initiation of loans and various assets.

Artificial Intelligence is gearing up to be the next big disruptor, reaching far beyond image generators and chatGPT. We're likely at the initial phases of the AI wave, merely dipping our toes into what's on the horizon. This of course presenting an intriguing investment opportunity to explore potential growth stocks in this rapidly advancing industry.

Nevertheless, we're not strictly adhering to a long term value-driven perspective, as we're not on ValueView. Instead, we're blending fundamentals, metrics, and technicals. Then formulate a short-term trading concept, that I personally will execute and would like to share here on TradingView, solely for recreational purposes.

Although Pagaya has fallen short of earnings expectations for a while, there's a notable steadiness in revenue growth. The company is anticipated to break even around the last quarter of '24 and Q1 '25, with yearly earnings growth projected at +90%. Additionally, important metrics hint at the possibility that this stock could be set for a reasonable future discount, paving the way for potential price appreciation.

Price currently trading at:
Price/Sales 1.47
Price/Book 2.16

The stock isn't exactly on a super sale, but it's not breaking the bank either, especially when you think about its growth potential. So perhaps we could explore some technicals to identify promising entry points from here.
But before we jump into the technicals, I'd like to point out some other positive aspects worth noting.

So, the company has a total of 598.3 million outstanding shares, with 315.76 million available for public trading. Taking a glance at the short positions:
Short % of Float: 1.03%
Short % of Shares Outstanding: 0.49%

These percentages suggest that a relatively small portion of the total available shares (both in terms of publicly traded shares and total outstanding shares) are currently being shorted. In other words, the data indicates that there isn't a significant amount of short interest in this stock. So, that's a positive.

And another positive note. Insiders currently hold approximately 26% of the shares, with the CEO owning 8.1% of the shares. This significant insider ownership is a positive indicator for various reasons:

- Getting everyone on the same page: When folks on the inside, like executives and employees, own a good chunk of the company, it means they're in sync with other shareholders. This usually means they're all about making choices that set the company up for long-term success.

- Believing in the company's game: When insiders own a piece of the pie, it's like giving a thumbs-up to the company's future performance. Their willingness to throw in their own money signals that they see some solid potential for growth and profitability ahead.

- In it for the long haul: When insiders have a hefty stake, they're likely thinking about the long-term. Their focus is on ensuring the company grows steadily and achieves success in the grand scheme of things, rather than chasing short-term gains

- Building trust and stability: Having a lot of insiders in the ownership mix can create a feeling of stability and trust for investors. It hints that the big decision-makers are fully invested in the company's success and less likely to do anything that might hurt the value for shareholders.

Taking a closer look at the metrics I mentioned, let's now shift our focus to the technicals and chart. From a Year-to-Date perspective, it's been quite in a range. Had a solid surge followed by a classic M-shaped descent. But here's the intriguing part: pay attention to the volume profile around the $1.20 range. It's a hotspot, no doubt. Initially, it dipped below that zone a few times, but post the major rally, it's been consistently bouncing off it. On top of that, it keeps forming these fresh higher lows. Now, adding to the mix the fact that short interest is on the low side, it's pointing towards a potential bottom, suggesting a potential upward trend is in the making. And let's not overlook the increase in regular volume - looks like the market is showing more interest in this stock.

Now, here's another interesting nugget: in this range, a solid resistance level has formed around $1.57, and that's exactly where we find ourselves at the moment. The big question: will it make a break for it from here? Well, that's the suspense we're in for in the days and weeks to come. If it does, that could be a solid signal to go long. Oh, and here's a behind-the-scenes tidbit not seen on my chart but worth noting: the price managed to break the 200MA on the upside, adding another layer to the green light.

Taking a glance purely from the recent peak to the current price action, there's a noteworthy observation: the price descended within this broadening channel. After a failed breakout in December '23, it took a sharp downturn. However, it not only rebounded off the bottom of that high volume zone but also bounced off the upper boundary of the downward broadening channel. The failed breakout created a new band within the broadening channel, from which it recently broke out again, accompanied by some decent volume. Now, it's testing the resistance at $1.57. If it clears that hurdle, things could get interesting from a trader's standpoint. It might suggest the formation of a W cycle, and a conservative target could be around $2.40 from here, with potential extended targets at $3 and $4.

Now, is there any risk in the mix? Well, yeah, a bit. Some metrics aren't all that positive, but they might carry less weight when viewed from a trader's perspective. You can sketch all the lines, throw in indicators, and scrutinize metrics, but if the market has a different take, well, you might find yourself in a bit of a pickle. So, there's certainly a chance that the price could struggle to break resistance again, with the market still on the fence, possibly leading to a sell-off, maybe into another range or a falling wedge until the next earnings call. Also, keep an eye out for some noteworthy news this week that could sway the broader stock scene - we've got PMI's, JOLT job openings, and Non-Farm Payrolls on the docket. And Mr. J. Powell is set to testify before Congress this week. Toss in the geopolitical situation with Israel and Hamas, and you've got a few factors to mull over.

But hey, war aside, let's just focus on the price setup and the upcoming data. It's gonna be a bit of a show to see if this current correction can make a snazzy bounce off that high volume zone. Ideally, we're talking about a higher high, maybe even a cheeky retest of that resistance zone. And if the breakout vibes aren't there, let's keep an eye on whether the price can chill in this wedge range until the next earnings call and maybe pull off a breakout from there.

To summarize. Artificial Intelligence (AI) is positioned as a significant disruptor, presenting an attractive investment opportunity. Pagaya, despite missing earnings expectations, shows stability in revenue growth. Key metrics suggest potential value, but risks include market sentiment, geopolitical issues, and upcoming economic data.

Please note that this analysis is for informational and recreational purposes only and should not be considered financial advice.

4 mars

Note

Correction:
But hey, war aside, let's just focus on the price setup and the upcoming data. It's gonna be a bit of a show to see if this current correction can make a snazzy bounce off that high volume zone. -> "Ideally, we're talking about a higher low,"

Also note that the box on the chart stating 'higher highs', should be "higher lows".

Forgive me, it was late at night and probably at a higher high myself ^-^