Shares of Israeli financial technology company Pagaya Technologies Ltd. were continuing their wild ride Tuesday, falling 60% as of midday in a move said to be related to a lockup expiration.

Pagaya
PGY,
-62.96%
,
which uses artificial intelligence to model lending risk, went public in June through a merger with a special-purpose acquisition company (SPAC). The company has noted in filings that lockup restrictions were to be lifted in part Sept. 20.

“The specific catalyst driving this week’s action is the partial expiration of the post-SPAC lock-up agreement occurring today,” MoffettNathanson analyst Eugene Simuni wrote in a Tuesday note to clients.

Pagaya disclosed that the Sept. 20 expiration applied to 50% of lockup shares. Restrictions are set to expire for the other 50% of shares on Dec. 19.

Pagaya shares are set to fall for the fifth straight session, though the company is used to seeing wild stock swings in both directions. The stock enjoyed two 100% daily jumps in July, and its shares are now trading about 90% below their Aug. 2 closing high of $29.95.

Simuni noted that Pagaya’s stock “has been volatile since the SPAC and now trades at a significant premium to fintech peers (~19x EV / NTM GP for Pagaya vs. ~8x peer average),” referring to the ratio of enterprise value to estimated gross profit for the next 12 months.

While Simuni views Pagaya as a “long-term winner in the ‘smart’ lending space,” he also sees further volatility in store for the stock, which he initiated with a market-perform rating last week. Pagaya has the next lockup-expiration date looming later this year, and it also must deal with the impact of interest-rate increases on its business, according to Simuni.

“[T]he current macroeconomic environment triggers several acute near-term risks for disruptive digital lending platforms like Pagaya – most critically, the risk that ‘smart’ underwriting models (not yet tested in an unfavorable credit environment) underperform and third-party financing (necessary to power originations) dries up,” Simuni wrote. “Thanks to the unique features of its model (e.g., reliance on pre-funded financing), Pagaya is shielded from some of these risks, but is not immune to them.”



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