Open main menu
Home
Random
Donate
Recent changes
Special pages
Community portal
Preferences
About Stockhub
Disclaimers
Search
User menu
Talk
Contributions
Create account
Log in
Editing
Revolut
(section)
Warning:
You are not logged in. Your IP address will be publicly visible if you make any edits. If you
log in
or
create an account
, your edits will be attributed to your username, along with other benefits.
Anti-spam check. Do
not
fill this in!
== Valuation == === Overview === Revolut's valuation has been subject to fluctuations in recent years. In 2021, the company achieved a valuation of $33 billion following an $800 million funding round. This valuation has since become a benchmark for assessing the company's performance. Molten Ventures, a tech-focused investment firm, has marked down its stake in Revolut by 40%. This reduction is based on its internal valuation of Revolut in both March 2022 and March 2023. Molten Ventures, which owns less than 5% of Revolut, valued its stake at £91.3 million in March 2022. However, the most recent valuation in March 2023 places the value of the stake at £54.5 million. This valuation shift indicates the challenges faced by Revolut in maintaining its valuation amid regulatory uncertainties and concerns about revenue transparency. === What's the Current Value of Revolut === As at its last Series E fundraise of $800M in July 2021 , Revolut was valued at $33bn<ref>https://www.revolut.com/fr-FR/news/revolut_raises_800m_series_e_funding_from_softbank_vision_fund_2_and_tiger_global/</ref>. The E round saw investments from Softbank, Tiger Global, etc. and placed Revolut as the most valued fintech in the UK and the second top in Europe just behind Klarna at the time<ref>https://sifted.eu/articles/revolut-33bn-valuation</ref>. Having only been valued at $5.5bn in its last raise in 2020, this represents about 6x increase on its previous valuation within just 12 months. {| class="wikitable" |+Revolut Valuation 2017 to 2022 ($bn) !Year !Valuation ($bn) |- |2017 |0.4 |- |2018 |1.7 |- |2020 |5.5 |- |2021 |33 |- |2022 | |} ''Sources: Pitchbook, Company data''<ref>https://www.revolut.com/fr-FR/news/revolut_raises_800m_series_e_funding_from_softbank_vision_fund_2_and_tiger_global/</ref> To understand the intrinsic value of Revolut, the stockhub user has decided to compare the performance of Revolut with its comparables or close competitors. For the purpose of this report, the close comps selected are Monzo, Starling Bank, and N26. * '''Monzo''': Monzo was established in 2015, at about the same time of Revolut. Recently valued at $3.7bn in its last round in 2021, Monzo currently has 7 million users and generated £440mn revenue in 2021<ref>https://www.businessofapps.com/data/monzo-statistics/</ref>. Not profitable since it commenced operation. * '''Starling Bank''': Within a two year period, Revolut, Starling Bank and Monzo were all launched. Starling Bank was launched in 2014 and is currently one of the three top challenger neobanks operating in the UK. As at March 2022, Starling Bank had 2.7 Million active customers and generated £188mn total income in 2022<ref>https://www.statista.com/statistics/1089562/key-financial-figures-for-starling-bank-united-kingdom/</ref>. * '''N26''': N26 is one of the neobanks that launched in the mid 2010s. Founded in Munich and received a banking license in 2016. Currently has other services such as basic current account, savings and insurance. As with Revolut, N26 currently does not have a UK banking license but operates across Europe with over eight million customers across 24 countries<ref>https://www.businessofapps.com/data/n26-statistics/</ref>. For context, in 2021, Revolut reported £636mn annual revenues a total of 15mn registered users. Using annual revenues and users multiple of peer companies, the estimated value of Revolut is shown in the table below. [[File:Revolut Comps.png|left|thumb|350x350px|Revolut valuation based on comparable companies; Monzo, Starling Bank, and N26. ''Sources: Company Financials, Pitchbook''<ref>https://pitchbook.com/profiles/company/64126-90#funding</ref>]] Judging by the value of comparables, the Stockhub User estimates the fair value of Revolut to be between the $10bn - $20bn mark. However, given the fact that Revolut and some of its comparables are private companies, investors might have thought differently about Revolut and thought it was a reasonable valuation ($33bn) to invest in at the time. Notable factors in the Revolut valuation: * '''UK banking license''': While Revolut peers such as Monzo and Starling bank both having licenses to operate as banks in the UK, Revolut has not been granted a UK banking license since it started the process in January 2021. Investors might have assumed Revolut to receive a banking license sooner rather than later thereby gaining access to cheaper capital and other revenue pools such as mortgages, deposit bank accounts, etc. However, the process has taken much longer, and till the point of writing this report, Revolut is yet to secure a UK banking license. On the other hand, as with Revolut, N26 does not possess a UK banking license. * '''Tech Boom at the time of Fundraise''': Generally, 2021 was a good year for tech companies to raise. Given the recent market conditions including the liquidation of SVB and Credit Suisse amongst others, 2023 has seen a downward revaluation in the prices of tech companies with the Nasdaq index losing a third of its value in 2022 alone. As such, some of the Revolut investors have now reevaluated their positions and even marked it down internally.<ref name=":1">https://sifted.eu/articles/revolut-33bn-valuation</ref> Given the private nature of Revolut, the 'downward revaluation' of Revolut is non-existent until Revolut go on the market to raise capital at a value lower than its current $33bn valuation (down round). The Stockhub user expects Revolut to wait till market conditions are much favorable before accessing the market for further capital either through a further round or an IPO. * '''Crypto Offering''': In 2021, crypto trading accounted for 30% of Revolut's revenues, but this dropped to around 5% in 2022 as the crypto boom ended.<ref name=":1" /> With the loss of high-margin revenues from crypto and trading, it is imperative for Revolut to find other strong recurrring revenues streams to shore up profits, however, the Stockhub user believes that would be tough especially as they do not have a UK banking license yet. From the points listed above, it is obvious that investors might have been paying a tech premium for Revolut. It's smooth interface, brand, ability to launch products fast and higher-margin revenue streams like crypto were its unique selling point over a traditional bank. It remains what happens with the UK banking license and other revenue streams that Revolut will be able to spring up. However, given the need to hold on to current valuations and make even more revenues, the Stockhub user is less bullish on an investment in Revolut till some of the issues outlined above are addressed. [[File:Valuation multiplier.png|thumb|963x963px|Valuation multiplier including comparable companies to Revolut]] Utilising a valuation multiple derived from the average multiple of comparable companies to Revolut also offers a means of valuation. In this instance the valuation multiple (21.3700462) applied to Revolut's 2021 revenue (£636,205,000) provides a valuation of 13.6 billion. However, this method also bears notable limitations that should be acknowledged. One of the primary weaknesses is the assumption that valuation multiples from comparable companies are uniformly applicable to Revolut. In reality, various factors influence valuation multiples, such as growth prospects, risk factors, market sentiment, and qualitative aspects unique to each company. The small data set of comparable companies used in your analysis might not capture the full diversity of the fintech landscape, potentially leading to skewed results. Furthermore, relying solely on valuation multiples and historical data overlooks the complex web of factors that contribute to a company's valuation. Elements such as profit margins, growth rates, competitive advantages, and macroeconomic conditions play a significant role in determining a company's worth. By excluding these factors, the estimation may lack a comprehensive understanding of Revolut's true valuation potential. Additionally, the method doesn't account for fluctuations in market sentiment and investor perceptions, which can have a substantial impact on valuation multiples. An important aspect often disregarded is the forward-looking nature of valuation. Companies are valued based on their future growth potential and strategic direction, elements that are difficult to capture through historical data alone. Your method also runs the risk of being influenced by outliers within the comparable set, potentially skewing the calculated average. Overall, while your approach provides a starting point for valuation estimation, it's essential to recognize its limitations and consider incorporating a more comprehensive analysis that accounts for the multifaceted dynamics impacting a company's valuation. Another valuation for Revolut is derived from the median valuation of the comparable companies which would value Revolut at £3.7 billion. The choice to use the median valuation as an estimation tool carries certain merits. Notably, the median is less sensitive to outliers than the mean, making it a robust option when dealing with a small data set where extreme values could disproportionately affect results. This resistance to outliers ensures that the calculated median is more reflective of the central tendency of the data, providing a reliable point of reference for valuation. However, this method also brings with it a set of limitations that warrant consideration. One of the most significant drawbacks lies in its lack of contextualization. By relying solely on the median valuation of the comparable companies, this approach fails to account for the unique attributes, growth prospects, risk profiles, and competitive advantages that differentiate each fintech entity. Consequently, it may oversimplify Revolut's valuation by overlooking the intricate factors that contribute to its worth. Furthermore, the median valuation approach assumes a static snapshot of valuations, disregarding the dynamic nature of market sentiment, regulatory changes, economic conditions, and company-specific developments that can impact valuations over time. In conclusion, while the median valuation approach offers certain advantages, such as its resilience to outliers and ease of use, it falls short in providing a comprehensive and accurate estimation of Revolut's true valuation. To enhance the reliability of your valuation analysis, a more comprehensive approach that considers a broader range of factors is recommended. This ensures a more nuanced understanding of Revolut's position within the fintech landscape and its corresponding market value.
Summary:
Please note that all contributions to Stockhub may be edited, altered, or removed by other contributors. If you do not want your writing to be edited mercilessly, then do not submit it here.
You are also promising us that you wrote this yourself, or copied it from a public domain or similar free resource (see
Stockhub:Copyrights
for details).
Do not submit copyrighted work without permission!
Cancel
Editing help
(opens in new window)