Fintech Stocks Are on Sale. This One Looks Like a Screaming Buy.

Remitly Global (RELY) reported robust Q3 results, with revenue up 25% to $419.5 million and adjusted EBITDA increasing 29%, yet its stock plummeted 25% following guidance projecting a deceleration in Q4 revenue growth to 21% and high-teen growth for 2026. This sell-off has compressed Remitly's valuation to a 1.7x price-to-sales ratio and 11x forward EBITDA, positioning the company as a potentially undervalued opportunity given its continued strong customer and volume growth, profitability, and inherently low credit risk business model focused on transaction fees, which differentiates it from other fintechs facing broader credit concerns.

Analysis

Remitly Global (RELY) reported robust Q3 2023 results, with revenue increasing 25% year-over-year to $419.5 million, exceeding estimates of $413.8 million, and adjusted EBITDA rising 29% to $61.2 million. Despite this strong operational performance, the stock plummeted 25% on November 6th following the earnings release. This significant sell-off was primarily attributed to management's guidance, which projected a deceleration in Q4 revenue growth to 21% and high-teen revenue growth for 2026.

The post-earnings decline has compressed RELY's valuation, with its price-to-sales ratio now at 1.7x and trading at 11x its forecasted annual EBITDA of $234-$236 million, marking its lowest point in nearly 18 months. Crucially, Remitly's business model, which derives most income from transaction fees, inherently carries significantly lower credit risk compared to other fintechs currently facing concerns over rising loan losses and delinquencies. This distinction positions RELY favorably amidst broader fintech sector headwinds.

The company continues to demonstrate strong underlying growth, with active customers up 21% to 8.9 million and send volume increasing 35% to $19.5 million, while strategically expanding its total addressable market to $22 trillion through a push into the business segment. New product launches, such as the Remitly One membership program offering "send now, pay later" and interest-earning wallets, aim to enhance customer engagement and expand use cases. These initiatives suggest a continued focus on long-term growth and customer lock-in despite near-term guidance concerns.

Key Decisions for Investors

• Investors should evaluate Remitly Global (RELY) as a potential long-term buying opportunity given its significantly reduced valuation multiples (1.7x P/S, 11x forward EBITDA) following a guidance-driven sell-off, despite robust Q3 operational performance.
• Consider RELY's differentiated business model, which relies on transaction fees and thus carries lower inherent credit risk compared to other fintechs facing increasing loan loss concerns, offering a defensive characteristic in the current environment.
• Monitor the execution of new product initiatives like Remitly One and the expansion into the business market, as these are critical for sustaining customer engagement and long-term growth beyond the near-term guidance deceleration.