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Pagaya Technologies Ltd. (PGY) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Pagaya Technologies Ltd. (PGY)

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Intrinsic Value (DCF)

Current$22.83
→
Intrinsic$14.63
-36%
$7.74$14.63$27.69
Market implies 34% growth for 5 years
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
At $23, the market prices in continued strong cash flow growth (34%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $8 → Bull $28. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →21%23%25%27%
8%$20$22$24$26
10%$12$13$15$16
12%$7$8$9$11
14%$4$5$6$7

Bull Case

  • Bull case ($28) offers 21% upside at 30% growth, 9% discount

Bear Case

  • Bear case ($8) implies 66% downside at 20% growth, 12% discount
  • Price reflects 34% growth expectations vs 25% historical — high bar to clear
  • Trading 36% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$54.10M
Year 2$67.63M
Year 3$84.54M
Year 4$105.67M
Year 5$132.09M
Terminal$1.94B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$43.28MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is PGY stock undervalued or overvalued?
🔴 OVERVALUED

PGY trades at $22.83 vs. our DCF-derived intrinsic value of $10.92, implying -54% downside. Using a 10.0% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($19.98) suggests limited upside.

What is PGY's intrinsic value?

Using a 5-year DCF model: Base FCF of $43M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $493M net debt and dividing by 0.07B shares: Bear $4.77 | Base $10.92 | Bull $19.98. Current price $22.83 implies -54% to base case.

How is PGY's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($1.27B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.