What happened
Shares of the fintech company Pagaya Technologies (PGY 20.00%) had jumped more than 82% as of 3:01 p.m. ET today, likely as a result of highly speculative traders taking advantage of the low float to squeeze the stock higher.
So what
Pagaya uses artificial intelligence to make more accurate credit decisions and help banks and fintech companies acquire more customers at scale. The company merged with and went public through a special purpose acquisition company and began trading independently in June.
Last week, the company's registration statement revealed that the public float was only about 945,000 shares and short interest in the company was about 18% at the end of June, making Pagaya ripe for a squeeze higher. Pagaya's stock at one point on July 20 had more than doubled.
Shares gave up some of the gains in recent days but are rocketing higher once again today. The average volume on the stock is just less than 12 million shares and volume today is close to 53 million shares, which explains the move.
Now what
Pagaya seems different from other meme stocks like GameStop and AMC because it's actually a company that could have a bright future.
However, with Pagaya now trading at nearly a $12.4 billion market cap, things have likely gotten a little bit ahead of themselves with the company reporting a $91 million loss in 2021. Also, more shares could come onto the market eventually.
I'm not saying this isn't a good company, but I don't think it's a good idea to buy shares like this due to the highly speculative and volatile nature of the stock right now. Your best bet is to wait for a pullback and get in at a better valuation.
