Pagaya Technologies vs. LendingTree: A Growth and Valuation Showdown in Fintech

In the ever-evolving fintech landscape, Pagaya Technologies (PGY) and LendingTree (TREE) have emerged as key players, each leveraging distinct strategies to navigate market dynamics. As investors seek sustainable growth and compelling valuations, a comparison of these two companies reveals stark contrasts. Let's dissect their financial trajectories, strategic advantages, and risks to determine which holds the upper hand in this race for fintech dominance.

Financial Performance: A Tale of Two Trajectories

Pagaya's first-quarter 2025 results signal a paradigm shift. With net income surging to $8 million (a $29 million YoY improvement) and adjusted EBITDA hitting $80 million (a 100% YoY jump), the company is proving its profitability pivot. Revenue rose 18% YoY to $290 million, driven by a 26% increase in fee-based income. Notably, its focus on capital-light operations—using AI to manage credit underwriting without balance-sheet risk—has streamlined costs, boosting margins.

Meanwhile, LendingTree's growth appears more muted. The digital marketplace reported 2025 revenue guidance of $955–995 million, a 9.2% YoY increase, but its 2026 outlook slows to 6.4%. Earnings momentum is waning too: its adjusted EBITDA is projected to grow only 11–21% in 2025, before declining by 3.5% in 2026. This divergence underscores Pagaya's superior earnings scalability.

Valuation: Cheaper, but Is It Better?

Valuation metrics favor Pagaya. Its P/B ratio of 3.66X is significantly lower than LendingTree's 4.66X, suggesting it trades at a discount despite stronger growth. However, LendingTree's ROE of 14.76% outperforms Pagaya's 9.28%, reflecting its efficiency in deploying equity.

The key question: Which metric matters more? For growth investors, Pagaya's projected 19.9% revenue CAGR in 2025 (versus LendingTree's 9.2%) justifies its lower multiple. Meanwhile, LendingTree's higher P/B ratio may indicate investor skepticism about its ability to sustain growth in a slowing market.

Strategic Positioning: AI vs. Marketplace

Pagaya's edge lies in its AI-driven business model. By automating credit underwriting and securitization, it reduces reliance on traditional banking partners and mitigates risk. Expanding into auto loans and point-of-sale financing further diversifies its revenue streams.

LendingTree, on the other hand, relies on its digital marketplace to connect borrowers with lenders. While it has diversified into credit cards and financial health tools (e.g., EarnUp), its model faces headwinds as competition intensifies. Its slower growth trajectory suggests it may lack the disruptive tech edge Pagaya possesses.

Risks and Uncertainties

Pagaya's success hinges on maintaining its network of 135+ funding partners and navigating macroeconomic risks, including rising interest rates and geopolitical tensions (e.g., Israel's conflict). Its heavy reliance on AI also exposes it to regulatory scrutiny.

LendingTree faces a different set of challenges: market saturation in its core segments and declining margins as it competes on price. Its slower growth and higher valuation could make it vulnerable if investor sentiment shifts toward higher-growth alternatives.

Investment Outlook: Pagaya's Time to Shine

The numbers paint a clear picture. Pagaya's capital-light model, AI-driven efficiency, and superior growth prospects position it as a stronger long-term bet. Its valuation is compelling, and its stock's 130% YTD surge reflects investor confidence.

LendingTree remains a stable, if slower-growing, play. Its 4.66X P/B ratio, however, may leave little room for error in an environment where growth is king.

Recommendation: Investors prioritizing growth and valuation should favor Pagaya (PGY). LendingTree (TREE) could be a hold for those seeking stability but lacks the catalysts to outperform in the coming quarters.

The fintech space demands agility and innovation. For now, Pagaya's blend of technology, scalability, and cost discipline makes it the standout choice in this showdown.