We came across a bullish thesis on Remitly Global, Inc. (RELY) on Substack by Chit Chat Stocks. In this article, we will summarize the bulls’ thesis on RELY. Remitly Global, Inc. (RELY)’s share was trading at $23.86 as of Feb 21st.
A customer using a mobile banking app at home to securely transfer money.
Remitly Global recently reported Q4 earnings, leading to a 10% post-earnings drop. Despite this, the stock remains up 75% over the last six months. The core thesis for Remitly is simple it executes exceptionally well, reducing costs at scale while expanding its reach. In Q4, revenue grew 33% year-over-year, with active customers up 32% and send volume increasing 39%. The company reported a record 60% gross margin, demonstrating that it is not only scaling efficiently but also improving its profitability. What’s even more impressive is that while gross margin expands, Remitly is simultaneously lowering remittance costs for customers. Send volume grew faster than revenue, indicating that customers are sending more money while paying less in fees—proof that the company is leveraging its economies of scale. Remitly supports over 500,000 cash pickup locations worldwide, further solidifying its competitive position.
Remitly’s marketing scale is another key advantage. The company has been able to deploy increasingly large sums into customer acquisition while becoming more efficient. In 2019, Remitly spent $43.5 million on marketing, accounting for 34% of revenue. In 2024, marketing spending jumped to $304 million, but as a percentage of revenue, it fell to 24%. Over the next five years, it is expected that Remitly’s marketing budget to exceed $1 billion annually, yet its efficiency will continue improving, potentially bringing marketing as a percentage of revenue down to 20%. This strategic allocation of capital will accelerate customer acquisition, deepen market penetration, and enhance Remitly’s brand advantage over legacy competitors like Western Union.
At just 3% of the global remittances market, Remitly remains a small player compared to Western Union, but its growth trajectory suggests it is hitting a tipping point in adoption. The company’s superior product, global reach, and efficient marketing machine create a strong flywheel effect that will drive consistent revenue growth, expanding margins, and eventually significant operating leverage.
Valuation remains compelling. With a current market cap of $4.8 billion, factoring in some dilution over five years, we arrive at a potential $6 billion valuation. If Remitly captures over 10% of the remittance market and grows revenue 4x to $5 billion, with disciplined cost management, it could generate $1 billion in operating income. At a 20x multiple, this would imply a $20 billion valuation—potentially much higher depending on market conditions. Even in a bear case, the stock remains deeply attractive at these levels, offering a rare mix of growth, scalability, and improving unit economics.
Remitly Global, Inc. (RELY) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held RELY at the end of the third quarter which was 29 in the previous quarter. While we acknowledge the risk and potential of RELY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RELY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.