Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Motley Fool Issues Rare “All In” Buy Alert
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
Pagaya Technologies (PGY -5.07%) didn’t make its investors happy this week. On the announcement of the Israel-based fintech’s latest piece of financial engineering, they sold the stock off by nearly 26% over the five trading days, according to data compiled by S&P Global Market Intelligence.
In a regulatory document filed on Thursday, Pagaya said that a group of stockholders would be selling class A shares of the company. This sale involves up to nearly 677 million shares. Additionally, the company said it was floating up to 46.1 million-plus new class A shares to cover warrants that are being sold in public and private placements.
The company stressed that it will receive no monies from the stockholder sale. It wrote in its filing that lock-up agreements had expired, or will expire in mid-December, with “certain of our shareholders” it did not identify. Pagaya went public in June via a merger with its special-purpose acquisition company (SPAC).
As for the warrants, they have drastically different prices depending on the nature of their sales. In the public placement, all will cost $11.50 per share, but they will be offered at varied prices in the private placements.
Pagaya is in a position to reap funds of up to roughly $169.7 million from the warrant issues. The fintech said it would utilize these proceeds for general corporate purposes. These might include acquisitions and the paying down of debt, it added.
Almost 677 million shares represent quite a potential flood on the market, considering that Pagaya’s current outstanding share count is slightly above 505 million. No investor likes share dilution, so the market’s unhappy, knee-jerk reaction to the news was understandable.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Market-beating stocks from our award-winning analyst team.
Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/19/2022.
Discounted offers are only available to new members. Stock Advisor list price is $199 per year.
Calculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Making the world smarter, happier, and richer.
Market data powered by Xignite.
