Exploring Investment Opportunities in Revolut
Revolut aims to establish the most potent financial application globally, granting individuals and businesses enhanced control over their financial matters for informed decisions on spending, saving, and financial expansion.
The company has made remarkable strides in a brief span. It commenced operations in the UK in 2015, offering swifter and cheaper foreign exchange and transfers compared to traditional banks.
Since then, it has expanded into a prominent financial force, serving over 45 million customers across 38 countries. It holds the top spot as the most downloaded finance app in 11 nations and ranks within the top three in an additional 21. The company continues to launch new services and ventures into more international markets to broaden its reach.
Revolut's innovative methodology and rapid expansion have generated significant anticipation for its Initial Public Offering (IPO). The company's potential and growth might pique your interest in investing in its stocks before the IPO. Here's a comprehensive guide to navigating the process of investing in stocks similar to Revolut ahead of its potential IPO.
IPO
An Initial Public Offering (IPO) signifies a private company's first sale of stock to the general public, thereby transforming into a publicly traded entity.
Is Revolut publicly traded?
As of late 2024, Revolut had not completed its IPO, remaining a private company.
When will it IPO?
When will Revolut IPO?
As of late 2024, Revolut did not have an IPO scheduled. However, the fintech company was preparing for its public debut after obtaining its UK banking license in July 2024. The firm was weighing its options, considering a UK listing or listing its stocks on a US exchange. It could go public as early as 2025.
How to invest
How to purchase Revolut stock
At this moment, shares of Revolut cannot be acquired through a brokerage account due to its private status. However, potential investors can explore alternatives. Here are three possibilities to invest in Revolut-like companies:
1. Nu Holdings
Nu Holdings is a provider of digital financial services, catering to over 110 million customers in Brazil, Mexico, and Colombia with savings, investing, borrowing, and insurance solutions.
The company's growth potential has caught the eye of prominent investor Warren Buffett, with Berkshire Hathaway - his firm - holding an early stake in Nu Holdings.
2. PayPal Holdings
PayPal Holdings is a leader in digital payments, connecting users and merchants through its technology for seamless digital transactions. With more than 432 million users as of late 2024, PayPal is a highly profitable company, returning substantial free cash flow to shareholders through share repurchases.
3. SoFi Technologies
SoFi Technologies offers a wide range of financial services, including bank accounts, credit cards, brokerage accounts, mortgages, student loans, and insurance. The company is rapidly expanding with an increasing number of users signing up for its growing list of financial offerings.
As of late 2024, it had almost 9.4 million members, with a 35% increase from the previous year. After years of posting losses, SoFi finally shifted to profitability in 2024.
Interested individuals can invest in these Revolut alternatives by purchasing shares through any brokerage account. Here's a straightforward guide to investing in these fintech companies:
Step 1: Open a brokerage account
Investors should open and fund a brokerage account before purchasing shares from any company. Familiarize yourself with the best-rated brokers and trading platforms to select the one that best fits your needs.
Step 2: Determine your budget
Decide on an investment budget before making your first trade. Afterward, decide how to allocate that budget. The Our Website investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years.
Step 3: Conduct thorough research
It's essential to delve deep into a company before purchasing its shares. Study its financial structure, competitors, balance sheet, and other factors to gain a well-rounded understanding of whether the company can create value for shareholders over the long term.
Step 4: Place an order
Once you've opened and funded a brokerage account, set your investment budget, and researched the stock, purchase the desired shares. The ordering process is straightforward - simply enter all pertinent information on your brokerage account's order page.
The quantity of shares you intend to purchase or the amount you wish to invest to buy fractional shares.The stock symbol (NU for Nu Holdings, PYPL for PayPal, or SOFI for SoFi Technologies).Whether you prefer to submit a limit order or a market order*. Our website suggests utilizing a market order as it ensures the immediate purchase of shares at the current market price.
Upon completing the order page, click the submit button to finalize your trade and becoming a shareholder of one of these Revolut alternatives. Investors would adopt a similar process to buy IPO shares like Revolut once it becomes publicly traded. Once shares become available, select Revolut's chosen stock symbol to buy shares through your brokerage account.
Earnings
Is Revolut profitable?
Privately held companies, such as Revolut, do not have to release quarterly earnings like publicly traded companies. However, in preparation for its IPO, Revolut disclosed financial results in its annual report for 2023.
According to its report, Revolut generated $2.2 billion in revenue in 2023, representing a 95% increase from 2022. Meanwhile, profit before tax was $545 million, and net profit was $428 million, with a net profit margin of 19%. In the report, CEO Nik Storonsky noted that 2024 marked Revolut's third consecutive profitable year.
The company anticipated that this trend would continue. Storonsky stated, "Revolut remains well-positioned for exponential growth in 2024 and beyond, continuing to revolutionize the financial services landscape as we know it."
Continuous profit growth will be crucial for Revolut as it pursues going public. Over the long term, earnings growth has historically been the primary driver of stock price appreciation.
Should I invest?
Should I invest in Revolut?
Since Revolut is not yet publicly traded, investors have ample time to research the company before buying shares during its eventual IPO. Here are some reasons why you might consider investing in Revolut:
- You're a fan of Revolut and its products.
- You believe Revolut can disrupt the traditional banking sector.
- You're optimistic that Revolut can continue to grow its revenue rapidly and deliver even faster earnings growth.
- You think Revolut deserves a high valuation, considering its growth potential.
- You understand the risks associated with investing in IPO stocks, including their potential volatility and the possibility of losing value.
On the other hand, here are some reasons you might choose not to invest in Revolut's IPO:
- You don't use Revolut or prefer a competitor's platform.
- You're concerned about Revolut's competition, which may impact its ability to grow.
- You're more of a value-focused investor and think Revolut's valuation ($45 billion post-money value as of late 2024) is high for a company generating about $2.2 billion in revenue and around $400 million in annual earnings.
ETF options
ETFs with exposure to Revolut
Revolut remains a private company that has yet to complete its IPO, so investors cannot acquire passive exposure to the fintech company through an exchange-traded fund (ETF).
Exchange-Traded Fund (ETF)
An exchange-traded fund, or ETF, allows investors to purchase multiple stocks or bonds at once. However, investors interested in the fintech space can achieve exposure to similar companies by investing in an ETF focused on the sector. Here are two notable fintech ETFs to consider:
- Ark Fintech Innovation ETF (NYSEMKT:ARKF): This ETF is managed actively by renowned investor Cathie Wood. The fund typically holds 35 to 55 companies focused on the fintech theme. As of late 2024, its largest holding was Coinbase (COIN - 2.84%) at 10.8% of its holdings. The ETF has a reasonable expense ratio of 0.75%.
- Global X FinTech ETF (NYSEArca:FINX): The Global X FinTech ETF is a passively managed fund that aims to track the Indxx Global FinTech Thematic Index. As of late 2024, it had 61 holdings, led by PayPal at 7.3% of its holdings. This fund has a reasonable expense ratio of 0.68%.
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The Final Gambit on Revolut
Revolut aspires to be a game-changer in the financial sector, by creating the world's first financial super app. It's rapidly expanding its user base, entering new markets, and expanding its product offerings.
This growth is driving robust revenue growth and boosting profitability. If Revolut can maintain its financial performance, it could be an engaging IPO stock to purchase when the company decides to go public.
Revolut is constructing the planet's initial all-encompassing monetary super app. It's swiftly garnering additional consumers as it broadens into new territories and offers customers an expanded array of financial goods and services. This growth is fueling robust income and earnings expansion.
Despite Revolut not being a publicly traded company as of late 2024, it's likely to eventually conduct an IPO. The company's valuation at that time will dictate whether Revolut is a sound investment choice.
Revolut previously attracted funding from investors in 2024 at a post-money valuation of $45 billion. This is a substantial price tag for a company that reported revenue of $2.2 billion in 2023. However, if Revolut continues its revenue and earnings expansion upon going public and its valuation is reasonable, it could make for a promising long-term investment.
Purchasing Revolut shares
As of late 2024, Revolut isn't a publicly traded company, so you can't buy its shares through your brokerage account.
Since Revolut is preparing for its public debut in 2025, its potential growth might spark interest in investing in its stocks before the IPO. Once listed, interested individuals can purchase Revolut shares through a brokerage account.
Investors can also consider alternative fintech companies like Nu Holdings, PayPal Holdings, and SoFi Technologies. These companies offer significant growth potential and can be purchased through any brokerage account.
