BofA upgrades Figure Technology stock rating on blockchain growth

BofA upgraded Figure Technology to Neutral from Underperform and raised its price target to $49 from $31, citing a stronger revenue-growth outlook through 2028 and increasing its valuation multiple to 25x from 17.5x. Figure reported 132% year-over-year Q2 2026 volume growth, while its Figure Connect blockchain loan marketplace increased its share of volumes to 65% from 42% a year earlier; trailing-12-month revenue rose 98%. The company guided Q3 volumes to $5.2B, up 16% sequentially, with the pending Kiavi acquisition expected to add $7B of volumes; Q2 adjusted EPS of $0.35 also beat the $0.19 forecast.

Analysis

FIGR’s investable question is not whether marketplace volume can compound, but whether incremental volume converts into durable net revenue and earnings without requiring balance-sheet support or lower-quality loan originations. A partner-led marketplace can scale with attractive operating leverage, yet rapid partner additions can also mask concentration, promotional economics, or adverse-selection risk; the key KPI for the next two quarters is net take rate and contribution margin per dollar of volume, not gross volume alone.

The acquisition-related volume uplift should be discounted until management discloses purchase consideration, funding mix, credit exposure, integration costs, and revenue yield on acquired originations. If Kiavi expands FIGR’s role from marketplace facilitator toward credit intermediary, the appropriate multiple falls: liquidity/funding sensitivity and credit-loss cyclicality would matter more than software-like growth. This is especially relevant if mortgage or consumer-credit spreads widen over the next 1-3 months.

The analyst upgrade is likely to improve near-term sponsorship, but its valuation logic appears internally fragile: a lower stated target multiple does not itself justify upside when the stock is already quoted at a substantially higher trailing P/E. Consensus may be underestimating the upside from a scalable network effect, but it is also likely over-extrapolating a favorable credit and securitization backdrop. A clean re-rating requires evidence that earnings growth is being driven by monetization and margins rather than simply transaction throughput.

Over 6-18 months, FIGR could take share from traditional loan intermediaries and private-credit platforms if its blockchain settlement infrastructure demonstrably lowers funding friction. Conversely, a risk-off credit event would expose the difference between technology-enabled distribution and true balance-sheet-light economics; that outcome would compress the multiple faster than volume growth can offset it.

Key Decisions for Investors

• Do not chase FIGR solely on the rating change. Establish a watch-level long only if quarterly revenue growth remains above 50% while take rate and adjusted operating margin are stable or improving; target a move toward $49 over 3-6 months, with thesis invalidated by a material take-rate decline or weaker-than-guided volume conversion.
• For existing FIGR longs, trim into a rally approaching $49 unless management quantifies Kiavi’s revenue, integration costs, financing requirements, and credit-risk retention. The acquisition’s stated volume contribution is not sufficient to underwrite EPS accretion.
• Use a defined-risk bullish structure rather than outright exposure ahead of the next earnings release: buy 3-6 month FIGR call spreads with the long strike near spot and short strike near $49. This captures a fundamentals-driven re-rating while limiting downside if elevated valuation normalizes.
• Set a credit-risk alert: reduce or hedge FIGR if ABS/mortgage-credit spreads widen materially, originations decelerate despite partner growth, or management begins retaining loans for longer. Those signals would indicate that marketplace growth is becoming funding-dependent and warrant a lower valuation framework.