Digitalization And Regulatory Changes Will Drive Market Expansion

Key Takeaways

• Regulatory changes and platform innovation are expanding the potential customer base and operational scalability, supporting greater platform engagement and higher revenue growth.
  
• Enhanced product offerings and cost efficiencies are diversifying revenue streams and improving margins, increasing the company's prospects for long-term profitability.
  
• Heavy reliance on non-recurring transaction revenues, persistent losses, and shifting competitive and regulatory dynamics create continued uncertainty around growth, profitability, and market leadership.

Catalysts

Operates a financial services platform in California.

• Ongoing regulatory momentum-including moves to expand access to private markets for non-accredited investors and through retirement vehicles like 401(k) plans-is poised to significantly widen Forge's addressable customer base, supporting future growth in trading activity, platform engagement, and thus revenue.
  
• The accelerating digitalization and integration of Forge's next-generation platform, with new features like automated negotiation and broadened API-driven access, is expected to drive higher operational scalability and increased transaction volumes, improving revenue growth and providing operating leverage that could boost net margins.
  
• Expansion of product offerings-including the launch of registered fund vehicles, enhanced data products like Forge Price, and new custody solutions-positions Forge to capture diversified and more recurring revenue streams, supporting top-line growth and greater margin stability.
  
• Strengthening network effects, as evidenced by record sequential growth in trading volume and rising institutional participation, should improve transaction throughput and revenue per user, while also increasing platform stickiness, which is likely to support improved long-term earnings power.
  
• Recent cost efficiency measures, technological investments, and offshoring initiatives are driving improvements in adjusted EBITDA and operating cash flow; combined with continued revenue growth, these trends increase the likelihood of achieving profitability and expanding net margins over the medium term.

Forge Global Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Forge Global Holdings's revenue will grow by 19.1% annually over the next 3 years.
• Analysts are not forecasting that Forge Global Holdings will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Forge Global Holdings's profit margin will increase from -73.6% to the average US Capital Markets industry of 25.9% in 3 years.
• If Forge Global Holdings's profit margin were to converge on the industry average, you could expect earnings to reach $39.7 million (and earnings per share of $2.83) by about August 2028, up from $-66.9 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.3x on those 2028 earnings, up from -4.4x today. This future PE is lower than the current PE for the US Capital Markets industry at 27.1x.
• Analysts expect the number of shares outstanding to grow by 1.64% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.07%, as per the Simply Wall St company report.

Forge Global Holdings Future Earnings Per Share Growth

Risks

• The company remains heavily reliant on transaction-based revenues, with management explicitly noting that a large proportion of income is still not recurring, making quarterly earnings forecasting difficult and exposing Forge to volatility in revenues and investor sentiment during periods of lower market activity or adverse macro conditions. (Revenue and earnings volatility)
  
• Despite recent improvements, Forge continues to post net losses and adjusted EBITDA losses, with the 2025 net loss slightly widening compared to the previous quarter, indicating lingering challenges in achieving profitability and raising the risk of further capital needs or cost-cutting that could impact growth initiatives. (Net margins and potential share dilution)
  
• The competitive landscape is evolving rapidly, with mounting threats from both traditional players and new entrants exploring digitalization and tokenization; Forge's measured approach towards tokenization may leave it vulnerable to disintermediation or market share erosion if competitors execute faster or more aggressively. (Revenue and long-term market share)
  
• The business is significantly correlated to the health and activity of the IPO and exit markets; while recent IPO momentum is positive, company leaders stressed lingering uncertainty and seasonality, implying that any sustained slowdown or setbacks in exit markets could materially decrease private share trading volumes and Forge's core transaction revenues. (Core revenue stream)
  
• Although regulatory trends are currently moving favorably, the pace and specifics of policymaker action (such as expanding access for non-accredited investors or allowing private assets in 401(k)s) are uncertain, and delays or reversals in these initiatives could dampen growth in Forge's addressable market and inhibit longer-term platform scale. (Addressable market size and revenue growth trajectory)

Valuation

• The analysts have a consensus price target of $34.4 for Forge Global Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $60.0, and the most bearish reporting a price target of just $18.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $153.5 million, earnings will come to $39.7 million, and it would be trading on a PE ratio of 15.3x, assuming you use a discount rate of 8.1%.
  
• Given the current share price of $21.88, the analyst price target of $34.4 is 36.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.