Remitly's Valuation Discount Faces Growth and Credit Risk Reality Check

What happened

Remitly's stock has derated sharply from over $20 to around $14 after management's 2026 guidance signaled high-teens revenue growth, disappointing investors accustomed to 25-30% expansion. Q3 2025 results showed operational strength with 25% revenue growth, 35% send volume increase, and adjusted EBITDA margins holding at 15%, but take rate declined. A Seeking Alpha article now advocates a strong buy case based on the low forward earnings multiple and anticipated Q4 results, highlighting valuation appeal. However, the DeepValue report underscores persistent risks including take-rate compression, rising transaction expenses, and credit exposure from new products like Flex. The critical challenge is whether Remitly can sustain high-teens growth while maintaining revenue less transaction expense near 65% and avoiding a credit or fraud shock.

Implication

The low forward multiple reflects market skepticism about Remitly's ability to maintain high growth and profitability amid competitive pressures and product complexity. If Q4 results and 2026 guidance confirm robust execution without further deterioration in take rate or credit metrics, the stock could re-rate towards the base case target of $19. However, failure to meet high-teens growth targets or a decline in RLTE% below 65% could trigger additional downside, aligning with the bear scenario of $11. Upcoming catalysts include full-year 2025 results and detailed 2026 outlook, which will test management's credibility. Given the thin margin of safety and elevated risk profile, position sizing should remain conservative with a focus on monitoring quarterly KPIs over the next 6-12 months.

Thesis delta

The Seeking Alpha article reinforces the valuation argument post-selloff, aligning with the DeepValue report's potential buy thesis at current prices. No fundamental shift occurs; the investment case still hinges on Remitly delivering high-teens revenue growth with RLTE% stability and controlled credit risks as outlined in the report.