It's been a soft week for Pagaya Technologies Ltd. (NASDAQ:PGY) shares, which are down 27%. But that doesn't detract from the splendid returns of the last year. Indeed, the share price is up an impressive 126% in that time. So some might not be surprised to see the price retrace some. The real question is whether the business is trending in the right direction.

Although Pagaya Technologies has shed US$5.3b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Check out our latest analysis for Pagaya Technologies

Pagaya Technologies wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year Pagaya Technologies saw its revenue grow by 379%. That's stonking growth even when compared to other loss-making stocks. And the share price has responded, gaining 126% as we previously mentioned. It's great to see strong revenue growth, but the question is whether it can be sustained. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

This free interactive report on Pagaya Technologies' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Pagaya Technologies shareholders have gained 126% over the last year. A substantial portion of that gain has come in the last three months, with the stock up 122% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. It's always interesting to track share price performance over the longer term. But to understand Pagaya Technologies better, we need to consider many other factors. Take risks, for example - Pagaya Technologies has 1 warning sign we think you should be aware of.

But note: Pagaya Technologies may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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