Why Remitly (RELY) Stock Is Nosediving

Kayode Omotosho /
2024/05/02 12:57 pm EDT

What Happened:

Shares of online money transfer platform Remitly (NASDAQ:RELY) fell 22.9% in the pre-market session after the company reported first-quarter results, which missed analysts' revenue estimates as its active customer count fell short. However, management noted that the first quarter is seasonally less active for customers and expects an improvement in customer activity in the second quarter. Looking ahead, the company's full-year revenue guidance slightly missed Wall Street's forecast. 

On the bright side, its adjusted EBITDA and EPS beat. Overall, the results could have been better, especially considering Remitly's premium valuation.

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What is the market telling us:

Remitly's shares are not very volatile than the market average and over the last year have had only 13 moves greater than 5%. Moves this big are very rare for Remitly and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 2 months ago, when the stock gained 24.5% on the news that the company reported fourth-quarter results that exceeded Wall Street's revenue and EPS expectations. The company also recorded strong user growth as active customer count grew 41% year on year, and came in ahead of analysts' expectations. Gross margin also improved significantly during the quarter. Looking ahead, revenue guidance for the full year came in ahead of consensus. Zooming out, this was an impressive quarter that should delight shareholders.

Remitly is down 17.5% since the beginning of the year, and at $15.68 per share it is trading 43.2% below its 52-week high of $27.59 from October 2023. Investors who bought $1,000 worth of Remitly's shares at the IPO in September 2021 would now be looking at an investment worth $323.63.

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