Remitly - A Hidden Gem
Ticker: RELY
I’ve been meaning to write this DD for a while, and with Remitly’s first quarterly earnings meeting having just concluded and the ensuing price drop I believe right now is one of the best times for entry in this hidden gem. While I don’t believe this is going to explode on some large catalyst, I believe there’s an opportunity here for a movement to the $45-50 levels in the next few months.
Who is Remitly?
Remitly is a recently IPO’d company that handles international remittances. Remittance refers to transfer of money by foreign migrants to their home countries. It consists of several channels such as banks, money transfer operators, mobile network operators, and others. Remittance has increased massively in recent years due to businesses involved with customers & clients working overseas. The opportunity here is huge, there are over 280 million immigrants and the global remittance market exceeds $1.5T annually.
Main competitors include Western Union (WU) as well as MoneyGram (MGI). However 90% of Remitly’s business is driven by digital methods, compared to 20% at these dinosaurs. Remitly’s users absolutely love the product – their app on Google Play has 285,000 reviews with a 4.8/5 rating.
RELY is currently trading close to 40% off it’s IPO highs. The only news that has come out about Remitly since the IPO has been the announcement of a partnership with Facebook on their NOVI wallet to power cash pickup in Guatemala. I consider this type of partnership neutral/bullish but it seems to have been taken negatively by the market given all the negative sentiment around Meta. I still do not believe that this drop is in any way warranted…
Remitly announced their Q3 2021 earnings on November 10 after market close.
- Revenue totaled $121.2 million, compared to $71.8 million, up 69% (giggidy) year over year.
- Net loss was $13.0 million, compared to $2.4 million net loss. The increase in Remitly’s net loss was primarily due to the $6.9 million non-cash donation of common stock in connection with their Pledge 1% commitment, as well as incremental stock-based compensation expense.
- Adjusted EBITDA decreased to $0.3 million, compared to $0.6 million.
- Send volume increased to $5.2 billion, from $3.2 billion, up 61% year over year.
- Active customers increased to 2.6 million, from 1.7 million, up 51% year over year.
- Average revenue per active customer increased 12% year over year to $47.34.
Analyst Coverage
Analysts have been generally quite bullish about the stock, with an average price target of $51, representing a 65% upside form the current price of $31
| Firm | PT | Rating |
|---|---|---|
| Wolfe Research | $42 | Outperform |
| JMP Securities | $52 | Market Outperform |
| JP Morgan | $57 | Overweight |
| Goldman Sachs | $61 | Buy |
| Barclays | $48 | Overweight |
| Keybanc | $48 | Overweight |
Disclaimer: Not a financial advisor and this is not investment advice. Do your own research and come to your own conclusions before investing in anything. I’m just some dude who lives in his mom’s basement and has an unhealthy addiction to Taco Bell.