Remitly Stock: Too Cheap to Ignore
Hello! Today, I've brought this topic to you! We're diving deep into the world of fintech, a sector that's been facing some serious headwinds lately. While many investors are running for cover, smart money knows that market downturns often create the best buying opportunities. Today, we're going to uncover one such gem: Remitly Global, a stock that looks like a screaming buy right now, despite recent market jitters.
The Nasdaq Composite might not be down a drastic amount from its peak, but if you look closely, you'll see cracks forming across the broader market. Consumer discretionary spending is showing signs of weakness, with popular brands like Chipotle, Lululemon, Deckers, and Nike all reporting struggles, particularly with the crucial 25-to-35 demographic. The housing market remains soft, and even the once-unstoppable AI infrastructure platforms like Coreweave and Nebius have pulled back significantly.
Amidst this broader softness, fintech stocks have really taken a hit. The primary culprit? Mounting concerns about rising credit risk, higher loan losses at regional banks, increasing auto loan delinquencies, and a general dip in consumer confidence. This perfect storm has caused fintech stocks to wither almost across the board. But as any seasoned investor knows, widespread fear often breeds incredible opportunities for those brave enough to look beyond the headlines.
Enter Remitly Global (NASDAQ: RELY). This company has carved out a leadership position in the global remittances market. What are remittances, you ask? They're cross-border payments, often from immigrants sending money back home, or businesses conducting international transfers. This is a massive, essential market, and Remitly, with its digital-first platform, has been rapidly taking market share from traditional players like Western Union and MoneyGram.
Their recent third-quarter results underscore this impressive growth:
- Active Customers: Up 21% to 8.9 million
- Send Volume: Increased 35% to $19.5 million
- Revenue: Jumped 25% to $419.5 million, beating analyst estimates.
While their "take rate" (the percentage they earn per transaction) is declining, it's a strategic move to serve more business and high-amount senders, which ultimately expands their total addressable market to a staggering $22 trillion!
But Remitly isn't just about growth; they're innovating too. They recently launched Remitly One, a $9.99 monthly membership program. This isn't just a simple subscription; it's a feature-rich offering that allows customers to "send now, pay later" up to $250 with no interest through Flex, earn 4% interest with Remitly Wallet, and spend directly with a Remitly Card with no foreign transaction fees. This program is a brilliant move to lock in customers, expand their use cases, and drive deeper engagement with their platform. On the profitability front, adjusted EBITDA rose 29% to $61.2 million, and GAAP earnings per share hit $0.04, up from $0.01 a year ago.
Despite these stellar results, the stock took a brutal 25% tumble on November 6th. The culprit? Its guidance, which projected a slowdown in revenue growth to 21% in the fourth quarter and high-teen revenue growth for 2026. This market overreaction has pushed Remitly's stock to its lowest point in nearly a year and a half.
But here's why this creates a fantastic buying opportunity:
- Undervalued Growth: The business itself is still delivering strong growth across all key metrics, is profitable, and is actively rolling out innovative new products like Remitly One.
- Dirt Cheap Valuation: After the sell-off, Remitly is now trading at a price-to-sales (P/S) ratio of just 1.7. For a company growing at this rate, that's incredibly cheap. It also trades at just 11 times its EBITDA forecast for the year of $234 million to $236 million.
- Low Credit Risk: Unlike many other fintech companies grappling with loan losses, Remitly generates most of its income from transaction fees. This means its exposure to credit risk is significantly lower, making it a much safer bet in the current economic climate.
If Remitly can continue its trajectory of top- and bottom-line growth, this stock has a truly bright future over the long term.
Q2. How is Remitly Global differentiating itself from traditional money transfer services?
A. Remitly Global is a digital-first platform that has rapidly gained market share from traditional competitors like Western Union and MoneyGram by offering a more modern and efficient solution for cross-border payments.
Q3. What is the significance of Remitly's low credit risk in the current fintech environment?
A. In an environment where many fintech stocks are suffering from concerns about rising credit risk and loan losses, Remitly's primary income from transaction fees means it has significantly lower exposure to such risks, making it a more resilient investment.