Enterprise Expansion And Innovation Propel Strong Revenue Growth Momentum

Key Takeaways

• MoneyLion's strategic expansion into new verticals and effective customer acquisition strategies are expected to significantly enhance its market reach and revenue opportunities.
  
• Enhanced personalized offerings and integration capabilities through MoneyLion Checkout are anticipated to boost earnings, expand revenue, and improve margins.
  
• MoneyLion faces risks from macroeconomic factors, regulatory changes, costly customer acquisition, diversification execution risks, and ongoing tech investment pressures on margins.

Catalysts

A financial technology company, provides personalized products and financial content for American consumers.

• MoneyLion is experiencing accelerating revenue growth, with expectations of increasing from 23% year-over-year in Q3 2024 to 34% in Q4 2024, suggesting strong growth momentum that could positively impact future revenue.
  
• The introduction of MoneyLion Checkout, an end-to-end solution that improves conversion metrics across its marketplace, is expected to drive significant growth in Enterprise revenue and expand margins due to improved integration capabilities, impacting future earnings positively.
  
• The company's strategic focus on deepening presence in new verticals like credit cards, mortgages, and auto insurance is anticipated to significantly expand its addressable market and revenue opportunities, potentially enhancing revenue and net margins.
  
• MoneyLion's successful customer acquisition and land and expand strategy, resulting in a rapidly growing customer base and increased product consumption on its platform, underscores potential for sustained revenue growth and improved lifetime value margins.
  
• MoneyLion is leveraging its technology and data-driven insights to enhance personalized offerings and optimize revenue opportunities for enterprise partners, a strategy likely to drive more contribution profit dollars, thus potentially boosting earnings and EBITDA margins.

MoneyLion Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming MoneyLion's revenue will grow by 24.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 0.6% today to 11.0% in 3 years time.
• Analysts expect earnings to reach $105.4 million (and earnings per share of $8.48) by about November 2027, up from $3.2 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 14.2x on those 2027 earnings, down from 298.2x today. This future PE is greater than the current PE for the US Consumer Finance industry at 12.9x.
• Analysts expect the number of shares outstanding to grow by 3.85% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.12%, as per the Simply Wall St company report.

MoneyLion Future Earnings Per Share Growth

Risks

• MoneyLion's growth strategy is heavily dependent on macroeconomic factors such as interest rates, which could negatively impact revenue if the macro environment becomes unfavorable.
  
• Any potential changes in regulation, particularly around products like earned wage access, could add compliance costs or impact the way MoneyLion conducts its business, affecting net margins.
  
• The company's focus on rapid customer acquisition could result in increased marketing expenses that may weigh on their earnings if these new customers are not monetized effectively.
  
• Diversifying into new financial product verticals like credit cards, mortgages, and auto insurance carries execution risk and could strain resources, potentially impacting overall operating margins.
  
• The need to continuously invest in technology and partnerships for offerings like MoneyLion Checkout may lead to unexpected costs, which could pressure EBITDA margins.

Valuation

• The analysts have a consensus price target of $101.17 for MoneyLion 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 $133.0, and the most bearish reporting a price target of just $80.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2027, revenues will be $960.4 million, earnings will come to $105.4 million, and it would be trading on a PE ratio of 14.2x, assuming you use a discount rate of 7.1%.
• Given the current share price of $86.64, the analyst's price target of $101.17 is 14.4% 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.