DD: Remitly, FinTech for Immigrants, 10X bagger at near fair value


Sorry I rushed getting this DD out ( I've already spent 60+ hours on research over the weekend but it wasn't enough). Remitly $RELY has earnings today and I wanted to give people last minute opportunity. I apologize for grammars/incomplete.

It's over 40k characters, so here is the complete DD: https://spotty-dead-a73.notion.site/Remitly-valued-priced-10x-bagger-FinTech-for-Immigrants-3903215d41a34d658a2ef671510a24c5

Remitly is a digital-first remittance company with best-in-class software. Based on the fundamentals and economics of remittances, Remitly is fair priced even when compared to brick and mortar businesses like WesternUnion. Yet, Remitly is the future while WesternUnion is a dinosaur facing an existential crisis. Remitly stands to be the new WesternUnion.

Let me give you the TLDR version:

– Last quarter, Remitly saw 69% YoY growth, while the non-digital-first incumbent, WesternUnion saw 0% top line growth, and actually lost 5% in North America, and then some in Europe. Without these segments, WesternUnion cannot survive. Remitly is 10 years old, WesternUnion is 170 years, yet Remitly has already reached 1/5th of WesternUnion's transaction volume. Once the digital-first providers overtake brick-and-mortar incumbents, I believe the equilibrium state is that space will then be carved out by Transferwise in Europe and Remitly in America ( in the same way Lyft and Uber coexists and keep each other competitive )

– Expect significant growth in Chinese market. With over 200k+ international students in the United States, Remitly lets Chinese customers legally send more than the $50k limit imposed by Chinese government, as long as these are for “educational expenses” including a primary car ( Lamborghini? )- MoneyGram and WesternUnion is developing a digital remittance platform, but they are not tech companies like Remitly. There are signs why they will not win this game.- Remitly is fair priced when compared to Transferwise in Europe, and Xoom when it was acquired by PayPal in 2015. Remitly is currently the largest digital-first remittance provider in the United States

– Beyond the R&D and technology, there is a regulatory moat around remittances. Facebook tried and gave up. They tried again with Libra and that didn't pan out. If it was easy, PayPal would not have had to acquire Xoom, which they've not given as much love to since acquisition as their darling Venmo

– Remitly is an inflation hedge and should not trade in sympathy with growth/tech reset. A customer sending $500 , Remitly takes the same commision. It doesn't matter what inflation is. Inflation affects what $500 is worth to the customer, but with labor shortages in high-tech/finance aswell as laborer jobs, we should expect people to send even more money ( let's say +7% due to inflation) on Remitly

– Series F investors paid $9.14. I think this is the maximum downside risk.

– Remitly has much stronger balance sheets than its American comparisons. It is well positioned to focus on Adjacent financial services for immigrants while MoneyGram/WesternUnion is playing catchup on digital remittance software. As an example, it just launched Passbook, a bank account for people without social security numbers. This is the beginning of a financial services platform, in the same way Chase brings in millenials in with the chase sapphire credit card and then sell them mortgages, and other financial products

Disclaimer: I own 19,470 shares ( average price $11.99) and $10k of ITM LEAP call options ($ 10 ) which I bought post-IPO. THIS IS FOR ENTERTAINMENT AND/OR EDUCATIONAL PURPOSES AND NOT INVESTMENT ADVISE.


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