Remitly Global, today's pick for IBD 50 Stocks To Watch, may lack the earnings of a typical growth stock, but investors have pushed the financial services stock up 126% this year on rapid revenue growth and the promise of profits just ahead.
Though the company has yet to turn profitable, sales have grown solidly and steadily over the past seven quarters. During the second quarter, active customers increased 47%. Total revenue of $234 million was up 49%, while an 11-cent loss per share showed an improvement from a 23-cent loss in the prior year quarter. Shares gapped up in strong volume after earnings on Aug. 3, according to IBD MarketSmith.
For the full-year 2023, the company raised its revenue expectations to $915 million-$925 million, which would be 41% growth at the midpoint, up from a prior estimate of $875 million-$895 million.
Technical ratings are uneven for the growth stock. The Composite Rating is just 84, below the ideal threshold of 90. The stock's EPS Rating lags at 33, but the Relative Strength Rating is a perfect 99.
Growth Stock Under Accumulation
The stock is clearly under accumulation as seen in strong upside volume since the earnings gap-up from the 50-day moving average. The Accumulation/Distribution Rating of A also shows institutional sponsorship.
Fund ownership has been increasing over the past six quarters, with mutual funds owning 44% of outstanding shares. Lord Abbett Developing Growth Fund (LAGWX) is among funds that hold RELY stock. Exchange traded funds hold the stock as well. The Fidelity Disruptive Finance ETF and First Trust Small Cap Growth AlphaDEX ETF hold shares of RELY.
The growth stock remains extended from an entry of 20.02 from a three-weeks-tight pattern and is extended from its 50-day line. A new base and proper entry are awaited.
Remitly provides digital financial services across 170 countries and territories through a cross-border remittance app. The company went public in 2021, at the height of the pandemic, at a price of $43 per share. Shares popped on the first day of trading and rose to an all-time high of 53.65 before falling to an all-time low of 6.66 in May 2022.
The company has several offices worldwide, including in Seattle, London, Singapore and Manila. In January, the fintech company completed its acquisition of Rewire for $80 million in a cash and stock deal. The acquisition expanded Remitly's geographical footprint to Tel Aviv and Amsterdam. Earlier, the company also acquired Seattle-based Symphoni in 2019 and mobile messaging app Talio in 2015.
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