In a vote of confidence for more modern remittance technology, shares of Remitly Global Inc. rose. Thursday by more than 20% in their first public offering, though they later pulled back from the opening price.
Shares of Remitly RELY,
opened at $52.90 each, above the company’s $43 IPO price, which itself was higher than the company’s suggested $38 to $42 price range. The stock went lower after the first trade and recently changed hands just above $46.
The company, which has raised $301 million with its offering, sees a major market opportunity as it seeks to simplify the process by which immigrants can send money to relatives living abroad. Remitly targets an addressable market of $540 billion in remittances sent through formal means to low- and middle-income countries. The company targets immigrants who say they often have to pay excessive fees or deal with unreliable operators when trying to transfer money through traditional means.
“Dominated by banks, physical location operators and informal channels, the players in these markets typically rely on disparate legacy systems and processes,” Remitly said in its prospectus. “This results in a poor customer experience and additional operating costs that are passed on to the customer.”
Remitly can operate at a lower cost structure than traditional players because of its digitally focused product, Chief Operating Officer Josh Hug told MarketWatch. He said the product also offers a “much simpler and clearer approach to customers” that can help people save time trying to access or send money across borders.
Remitly IPO: 5 things to know about the remittance company
The company posted $202.1 million in revenue in the first six months of 2021, up from $105.1 million in the first six months of 2020. It lost $9.2 million in the first six months of 2021 compared to $21.1 million in the first six months of 2020.
While Remitly has made progress in improving profit margins, the company plans further investments in the business, said Chief Financial Officer Susanna Morgan. Investments in growth are the “top priority” for Remitly, she continued.
Looking beyond remittances, the company sees room to expand more broadly into financial services with offerings tailored to the immigrant population. Remitly launched its Passbook mobile app last year, giving customers access to digital banking services offered by a partner bank, and it has seen “encouraging early adoption” since that rollout began.
The Renaissance IPO ETF IPO,
is up 8% in the past year, while the S&P 500 SPX,