We came across a bullish thesis on Remitly Global, Inc. (RELY) on Chit Chat Stocks’ Substack by Chit Chat Stocks. In this article we will summarize the bulls’ thesis on Remitly Global (RELY) share was trading at $14.55 as of Sept 13th.

A customer using a mobile banking app at home to securely transfer money.

Remitly Global (RELY) has emerged as a compelling investment opportunity, particularly following a 72% stock price decline since its IPO in 2021, despite robust fundamentals. The company's revenue has grown at an impressive 61% annual rate since 2019, driven by its mission to simplify cross-border remittance payments. Founded by Matt Oppenheimer in 2011 after identifying inefficiencies in money transfers while working in Kenya, Remitly has focused on making remittances safer, faster, and more convenient through its mobile app. Today, it is the largest U.S.-based digital remittance platform, competing with Wise, PayPal, and Western Union, while serving over 170 countries.

Remitly’s growth strategy is centered around targeting key remittance corridors, such as the U.S. to the Philippines, India, and Mexico, where young, tech-savvy professionals frequently send money back to their families. Its product offering, which allows recipients to receive funds via various methods, including cash pick-up and digital transfers, sets it apart from competitors like Wise, which focuses solely on digital transfers. This flexibility has helped Remitly capture a significant share of the market, with send volume growing by 51.5% annually since 2019 and a current 2.5% market share.

The company's business model relies on transaction fees, with a current take rate of 2.35%, higher than Wise’s due to the added costs of offering cash pick-up options. This allows Remitly to address a broader market and drive rapid volume growth. Although its operating margins are currently negative, improvements in transaction expenses and customer support costs suggest profitability is within reach. With gross margins nearing 55%, and the potential for further improvements as Remitly scales, the company is poised to achieve 20% operating margins over time.

Looking ahead, Remitly’s growth prospects are bolstered by international expansion, particularly in non-North American corridors, which have grown at a staggering 109% annual rate since 2019. Additionally, the upcoming launch of Remitly Circle, which will offer global accounts for saving, sending, and spending money internationally, presents further upside. With a market cap of $2.7 billion, Remitly offers an attractive entry point for investors, with the potential for a 3x to 5x return over the next five years.