Is Revolut Overvalued? Breaking Down the $75B Valuation

Revolut just hit a $75B valuation via a secondary share sale, more than some UK high-street banks and even Nubank (despite Nubank’s larger revenue and users).

In this Banking Without Borders episode, Jonny and Jan break down:

• What the secondary sale really signals (and why headlines matter)
• Revolut’s numbers: revenue, profit, users, deposits, and margins
• The super-app moat (wealth, business banking, subscriptions) vs. copycats
• Bull vs Bear cases: regulation, US expansion, rate cycles, fees, customer trust
• Lessons from Amazon/Tesla … and cautionary tales like WeWork
• IPO timing, venue (London vs NASDAQ), and how we’d approach the stock at listing

Stick around to the end for our verdicts: Jan's cautious take vs. Jonny’s bullish case.

Connect with us (via LinkedIn)

Jan: https://www.linkedin.com/in/jan-watermann/

Jonny: http://www.linkedin.com/in/jonny-pease

Got a question or topic you want us to cover? Drop us a message at jonny@technicallymoney.com

Transcript

00:00:00:00 - 00:00:02:13
Unknown
Okay. Welcome back to another episode of Banking Without Borders.

00:00:02:13 - 00:00:14:03
Unknown
Let's talk about this recent Revolut valuation of $75 billion. Because this is miles ahead of legacy banks like Barclays, NatWest and Lloyds and makes them one of the most valued fintechs in the world.

00:00:14:03 - 00:00:18:15
Unknown
It also gives them a greater valuation than new Bank, a South American behemoth bank with

00:00:18:15 - 00:00:21:12
Unknown
double the users and far more revenue and profit.

00:00:21:12 - 00:00:25:06
Unknown
So we're going to look today at Revolut numbers and see if we can make sense of this.

00:00:25:06 - 00:00:32:02
Unknown
We'll also look at the bull and bear cases for the long term in this. And if this is even sustainable and also what we can learn from history,

00:00:32:02 - 00:00:38:08
Unknown
could Revolut be the next Amazon, a company that was once valued at $20 billion and wasn't even profitable?

00:00:38:10 - 00:00:40:10
Unknown
Or could they be the next? We work?

00:00:40:10 - 00:00:45:13
Unknown
But first, Yann, I think it's really important that we look at how we got here and how this valuation came about.

00:00:45:13 - 00:00:52:02
Unknown
So it stems from a secondary sale. And the good metaphor for this is if you imagine you're in a classic Ferrari and you're considering selling, but

00:00:52:02 - 00:00:53:11
Unknown
don't want to sell the whole car.

00:00:53:11 - 00:00:54:01
Unknown
So instead

00:00:54:01 - 00:00:58:01
Unknown
you decide to sell one of the vintage leather seats and for an eye watering

00:00:58:01 - 00:01:02:12
Unknown
price. Now, you haven't sold the Ferrari, but you've just set an impressive price for a piece of it.

00:01:02:12 - 00:01:06:21
Unknown
So you can now go around telling everyone that the rest of the car must be worth millions.

00:01:06:21 - 00:01:08:05
Unknown
That's pretty much what's happened here.

00:01:08:05 - 00:01:09:20
Unknown
Revolut isn't raising new money,

00:01:09:20 - 00:01:13:12
Unknown
it's just early employees and investors who own a seat in the car.

00:01:13:12 - 00:01:18:02
Unknown
They're selling their personal shares to big investment funds for a fantastic payday.

00:01:18:02 - 00:01:19:03
Unknown
And why does it matter?

00:01:19:03 - 00:01:23:01
Unknown
Well, it creates a powerful headline. It allows Revolut to go to the wall and say, look,

00:01:23:01 - 00:01:33:10
Unknown
major investors just paid a price that values our company at $75 billion. And that sets a benchmark for hype and excitement for when they go to sell the entire car

00:01:33:10 - 00:01:40:06
Unknown
if we look purely a Revolut accounts Yann at their high level numbers such as revenue and profit.

00:01:40:06 - 00:01:43:10
Unknown
Does this $75 billion figure make sense?

00:01:43:10 - 00:01:53:08
Unknown
Well, Johnny, $75 billion in market capitalization on valuation is quite ambitious, if you ask me. Revolute is without a doubt,

00:01:53:08 - 00:01:59:02
Unknown
hugely fast growing company. If not one of the fastest growing banks on the market right now.

00:01:59:02 - 00:02:04:02
Unknown
revenue from 2023 to 2024 has grown by 72%.

00:02:04:02 - 00:02:06:18
Unknown
Net profit has grown by 130%

00:02:06:18 - 00:02:10:10
Unknown
net margin is increasing as well, from 19 to 26%.

00:02:10:10 - 00:02:11:08
Unknown
And the users,

00:02:11:08 - 00:02:14:17
Unknown
have grown by user base has grown by 38% as well.

00:02:14:17 - 00:02:15:13
Unknown
Those are

00:02:15:13 - 00:02:17:16
Unknown
reasons for high valuation.

00:02:17:16 - 00:02:19:04
Unknown
only thing I'm asking myself,

00:02:19:04 - 00:02:30:02
Unknown
isn't 75 billion a little too high, considering the fact that revolute is only, only pulling in $1 billion in annual profit. At least that's how it has been in 2024.

00:02:30:02 - 00:02:32:10
Unknown
would put the P at 75.

00:02:32:10 - 00:02:35:01
Unknown
Yeah, quite, quite a high valuation, if you ask me.

00:02:35:01 - 00:02:36:02
Unknown
Yes, it is

00:02:36:02 - 00:02:48:22
Unknown
based on those numbers. Yeah. But what about the guidance for 2026? Because that's where you could arguably justify the investment if if Revolut can predict future, future earnings and they're far greater than their current earnings. And

00:02:48:22 - 00:02:51:22
Unknown
if you look at the growth trajectory it is pretty impressive.

00:02:51:22 - 00:02:57:11
Unknown
You know, going from like 35, 36, 37 million customers, like 50, 52 million in a year.

00:02:57:23 - 00:03:00:20
Unknown
And that should directly equal,

00:03:00:20 - 00:03:03:05
Unknown
greater growth in revenue and in profit.

00:03:03:05 - 00:03:15:20
Unknown
And that for investors, must look incredibly appealing. They are paying for essentially the future outlook for Revolut and not the current valuation. I think that would like a good case for this. Right?

00:03:15:20 - 00:03:29:21
Unknown
Isn't that the case with any, any company that, sells money? Sells shares to investors. It's always about the future outlook. It's never about the present. And, even considering that fact, I still think the the valuation is quite ambitious.

00:03:29:21 - 00:03:34:16
Unknown
just, to give you a number. Revolute account holders currently hold

00:03:34:16 - 00:03:36:10
Unknown
$38 billion

00:03:36:10 - 00:03:36:19
Unknown
in,

00:03:36:19 - 00:03:39:13
Unknown
combined account balances on their revolute account.

00:03:39:13 - 00:03:58:02
Unknown
So that's kind of. Yeah, it's what's that, like $2? A valuation equals $1 of deposits that account holders hold in there for a bank. That's ambitious. So the only the only case I see here is that, yeah, probably most investors see revolute as a superb. Right.

00:03:58:02 - 00:03:58:16
Unknown
Yes.

00:03:58:16 - 00:04:00:17
Unknown
a future superb. And not

00:04:01:19 - 00:04:09:02
Unknown
Yeah. Yeah. Although the banking argument is still incredibly compelling. Not only just personal banking, but also from like a wealth management or

00:04:09:02 - 00:04:21:10
Unknown
a wealth in like an investment perspective whereby like customers that are using the Revolut app for banking or for investments, these are things that are actually incredibly difficult to give up and move on to other platforms.

00:04:21:10 - 00:04:35:08
Unknown
So while I think investors should be definitely eyeing up the fact that they're building this super app with loads of different products, ultimately they're building clients, customers that are using this app for business and wealth, and those things are incredibly difficult.

00:04:35:08 - 00:04:43:08
Unknown
switching cost for customers is incredibly high. It's hard to get out, and I think that is immediately quite attractive to customers, to sorry to investors,

00:04:43:08 - 00:04:48:02
Unknown
but I also agree that there's a lot more to Revolut than just the banking side of things.

00:04:48:02 - 00:04:54:16
Unknown
And I think that's obviously really attractive to investors. I mean, if you look at their valuation. Yeah. And compared to like wise,

00:04:54:16 - 00:04:56:08
Unknown
for example, who trade on a

00:04:56:08 - 00:04:57:00
Unknown
far less,

00:04:57:00 - 00:04:58:00
Unknown
PE ratio,

00:04:58:00 - 00:05:10:16
Unknown
wise, arguably have fewer products and as a result have less customers that they can acquire, which I think puts Ys in a position which makes more sense than valuation, seems more logical and reasonable.

00:05:10:16 - 00:05:25:12
Unknown
Whereas right now, on paper, Revolut looks so unreasonable and so inflated. But ultimately, it's probably a result of the fact that this super app status gives them far more of a customer pool to, to potentially hoover up.

00:05:25:12 - 00:05:39:00
Unknown
And they're doing extremely well. Yann. I mean, 65% of their their customers are acquired organically. So then that's through word of mouth, through referrals, that that alone has to be incredibly attractive to investors.

00:05:39:02 - 00:05:40:18
Unknown
Yann, because it's so cheap.

00:05:40:18 - 00:05:44:10
Unknown
bonus that most, most customers are getting offered every week? You're receiving

00:05:46:03 - 00:05:50:07
Unknown
And they've got a marketing budget of about $600 million

00:05:50:07 - 00:05:51:16
Unknown
that they can deploy

00:05:51:22 - 00:06:03:01
Unknown
They don't even have to try that hard to get new customers. So they're just deploying elsewhere. They're just throwing it out there on the. Have you have you seen Yann? They are now sponsoring an F1 team. For example.

00:06:03:01 - 00:06:07:15
Unknown
insane. Yeah. And and, the disarms that are required to do that, you know,

00:06:07:15 - 00:06:11:11
Unknown
Oh, buddy, can you.

00:06:11:11 - 00:06:13:01
Unknown
fintech startup,

00:06:13:01 - 00:06:18:08
Unknown
reaches a position where they can sponsor an F1 team. You know, it's it's kind of kind of a new

00:06:18:12 - 00:06:19:12
Unknown
A British

00:06:19:12 - 00:06:20:07
Unknown
there would have

00:06:20:07 - 00:06:21:03
Unknown
fintech.

00:06:21:03 - 00:06:22:06
Unknown
actually European fintech.

00:06:22:06 - 00:06:29:12
Unknown
Right. They didn't say European Union based fintech, but that's a scenario that you could have not imagined a few years back.

00:06:29:12 - 00:06:32:06
Unknown
No, no I agree, I agree. And it's not just the F1,

00:06:32:06 - 00:06:36:09
Unknown
the NBA. I believe they might even sponsor Man City's women's team.

00:06:36:09 - 00:06:39:11
Unknown
You know they are deploying their budget aggressively.

00:06:39:11 - 00:06:54:04
Unknown
And they're saying to investors, look we have this type of money to spend. Can you imagine the number of customers that we could acquire as a result across the next few years alongside this organic growth that has to anchor this valuation has to be one of the reasons for it.

00:06:54:04 - 00:06:54:16
Unknown
You know what I'm

00:07:02:15 - 00:07:04:05
Unknown
That's a good question.

00:07:04:05 - 00:07:07:02
Unknown
be 100 billion plus or so

00:07:07:02 - 00:07:08:07
Unknown
That's a good question.

00:07:08:07 - 00:07:12:11
Unknown
that's something that's not immediately planned. Right. It's not going to happen today or tomorrow.

00:07:12:11 - 00:07:25:05
Unknown
I think it might happen next year, maybe 2027. I don't know what the exact plans are, but, that's what I would expect as a timeline. And, right now, Revolut is one of the most valuable private companies in the world.

00:07:25:07 - 00:07:30:18
Unknown
And, yeah, it's it's going to be a 100 billion plus IPO, if you ask me.

00:07:30:18 - 00:07:37:09
Unknown
Yeah, it has to be it has to be over 100 billion, and it doesn't have to happen next year. It doesn't even have to, the year after, because they've still been able to raise

00:07:37:09 - 00:07:39:11
Unknown
$2 billion in fresh funding.

00:07:39:11 - 00:07:42:17
Unknown
still able to raise money on the private markets. And I think they'll just take this

00:07:42:17 - 00:07:43:08
Unknown
to the point in which

00:07:43:08 - 00:07:43:15
Unknown
where

00:07:43:15 - 00:07:46:08
Unknown
there's no longer a large scale of employees with shares to sell.

00:07:46:08 - 00:08:01:02
Unknown
And new investors have already come in the likes of SoftBank, Tiger Global, those are the investors that be looking to IPO to get the returns on their investment. But they've only just come in recently. So I think it could be a few years until we see this go to an IPO. And then

00:08:01:02 - 00:08:03:12
Unknown
who knows. I mean it could be 200.

00:08:03:14 - 00:08:11:03
Unknown
I don't even want to say, but it could be 200 billion, could be ridiculous market capitalization because ultimately if this growth continues,

00:08:11:03 - 00:08:13:06
Unknown
users are up by 38% in just a year.

00:08:13:06 - 00:08:18:04
Unknown
I mean, they could go to like 75 million next year and 100 million by 2027.

00:08:18:04 - 00:08:24:10
Unknown
also, considering the fact that they're expanding now into so many new markets, I mean, it's going to, additionally boost this growth.

00:08:24:10 - 00:08:27:09
Unknown
Yeah I think this is an important topic to sit on for a moment buddy, because

00:08:27:09 - 00:08:40:10
Unknown
the idea of the super app I think is really another anchor for this valuation. And, and I think it's like building a moat around the app isn't it. It's about sealing yourself in and holding your users, making them as sticky as possible.

00:08:40:10 - 00:08:44:22
Unknown
And I think the more products that you get people using on the app, the more likely they are to leave.

00:08:44:22 - 00:08:56:00
Unknown
And if we look to what the roadmap looks like in terms of what they could be launching in the future as well, on the app, I mean, what can we expect? Yeah, I mean, we know that we've got mortgages coming soon that's going to be incredibly valuable.

00:08:56:00 - 00:09:02:07
Unknown
What about Bnpl as well? Buy now, pay later products. Those are going to be coming. That's going to be more valuable for them.

00:09:02:07 - 00:09:11:03
Unknown
And once they get a UK banking license, you can be certain that they're going to launch a credit product, maybe a few credit products, at least,

00:09:11:03 - 00:09:14:10
Unknown
Then also for businesses, potentially, business loans,

00:09:14:10 - 00:09:23:03
Unknown
I mean I don't want to jump back and forth, but business banking I mean, we haven't even mentioned the fact that business banking I think now contributes to about 15% of their revenue, like half a billion.

00:09:23:03 - 00:09:30:05
Unknown
And that's growing hugely. And they've done some great things in the UK in terms of business banking without being fully licensed.

00:09:30:05 - 00:09:53:17
Unknown
again, they've got to this valuation without having a full UK banking license which to be fed this. I mean, they might they might not be authorized by the time I turn like 100, but it's probably going to happen eventually. It has to. Right. Because ultimately they are the darling of fintech here in the UK. They are

00:09:53:17 - 00:09:55:12
Unknown
we we need Revolut right now.

00:09:55:12 - 00:10:17:02
Unknown
And I think that even though there is a great separation between politicians and the FCA and the PRA, the people that are responsible for licensing Revolut, I think there will be some political pressure. They'll pretend there's not, but I genuinely think that that license will have to come through eventually, even just for the sake of the British economy, I think because it will help grow the economy, because it should help grow Revolut.

00:10:17:04 - 00:10:29:02
Unknown
And again, that valuation surely has to be anchored by the prospect of them being fully authorized in the UK and what they've done prior to that authorization, how impressive it's been.

00:10:29:04 - 00:10:33:07
Unknown
Yeah. Let's hope the, the people, the Bank of England see it in a similar way. Johnny.

00:10:33:13 - 00:10:37:00
Unknown
Well, they're probably watching this right now, buddy, thinking I couldn't agree more with them.

00:10:37:00 - 00:10:40:08
Unknown
should we discuss, like, the bull and bear cases for this?

00:10:40:08 - 00:10:52:23
Unknown
could this $75 billion valuation just fail miserably? Is there a chance that Revolut it's 20, 25, 26 reporting could be flat and stagnant?

00:10:52:23 - 00:10:54:00
Unknown
don't think so.

00:10:54:00 - 00:10:56:03
Unknown
Right. I don't see how

00:10:56:03 - 00:10:57:16
Unknown
how this growth stops, but.

00:10:57:16 - 00:11:17:04
Unknown
Yeah, it's all tied to to growth. And as you mentioned, a lot of the growth is coming through organic referrals. And it's kind of like a snowball that you're pushing down. Ahead. Right. It's it's going to turn into an avalanche at some point. It's not going to stop, all of a sudden, organic growth is something that that scales incredibly well, typically.

00:11:17:06 - 00:11:35:13
Unknown
And therefore I do to see them growing in 2026 and 2027 and so on. The question is just, are they going to reach their growth targets, which are, yeah, insanely ambitious considering the fact that they've, yeah, they've almost doubled their user base in just a year.

00:11:35:13 - 00:11:41:00
Unknown
At least in the immediate future I think I could see that Revolut will continue to grow.

00:11:41:00 - 00:11:44:13
Unknown
And I don't see the growth slowing down anytime soon.

00:11:44:13 - 00:11:53:06
Unknown
I think maybe the numbers that they've put out, they're like, $100 billion in annual revenue. Seems a little optimistic when they're projecting, I think, 9 to 10 billion by 2026.

00:11:53:06 - 00:11:55:12
Unknown
You know, ten x that I'm not really sure. How

00:11:55:12 - 00:11:56:07
Unknown
you going to do that?

00:11:56:07 - 00:11:58:18
Unknown
you're going to need to get fully authorized in the US.

00:11:58:20 - 00:12:06:08
Unknown
You're going to have to have loads of lending and credit products in the US. That's going to be a huge market for you, and that's going to be years away from fully happening.

00:12:06:08 - 00:12:13:11
Unknown
but I do think the bull case is strong here, and I do think there is definitely a lot more room for growth. But I also think there's an argument for the bears.

00:12:13:11 - 00:12:13:21
Unknown
Yan.

00:12:13:21 - 00:12:24:03
Unknown
You know, there is still a lot of skepticism towards Revolut. I mean, just before we got on this call, what did you tell me about wealth management? We were discussing the the idea that Revolut could try to capture wealthy clients

00:12:24:03 - 00:12:27:13
Unknown
so they could have far greater deposits, and then they could lend more money and make

00:12:27:13 - 00:12:31:03
Unknown
greater net interest margins of the amount of money they make on lending and saving.

00:12:31:03 - 00:12:32:20
Unknown
But you said something interesting about wealth

00:12:32:20 - 00:12:34:05
Unknown
and potential skepticism.

00:12:34:05 - 00:12:57:04
Unknown
Yeah. Capturing wealthier clients is a great idea. Of course. Everyone will agree with that. The question is, just how realistic is that, really? Considering the fact that Revolut is still quite a young fintech startup that's, all of a sudden competing in the wealth management market with, banks that have been have been there for, yeah, some, some even 100 years or longer.

00:12:57:06 - 00:12:59:21
Unknown
So that's that's going to be a massive challenge. And

00:12:59:21 - 00:13:06:15
Unknown
Revolut customers. Yeah. Typically quite satisfied, but also some if you look at their Trustpilot profile,

00:13:06:15 - 00:13:10:17
Unknown
don't have the best experiences with their customer support, and it's typically tied

00:13:10:17 - 00:13:12:01
Unknown
bad experiences,

00:13:12:01 - 00:13:20:21
Unknown
within, AML processes. So, whenever there's a, an account gets flagged for some suspicious behavior, whether it's justified or not,

00:13:20:21 - 00:13:22:16
Unknown
it takes some time to get that unblocked

00:13:22:16 - 00:13:28:10
Unknown
obviously that's not a situation you want to be in. If you have, let's say, the majority of your net worth

00:13:28:10 - 00:13:52:13
Unknown
Yeah. I can see Revolut though like building like a sub app. You know, something with slightly different branding. It be called like Revolut Elite or something, something like hideous like that. And it would be like a different app. It feels like possibly like a side brand and possibly it would have different AML, different like checks in place to make sure something like that doesn't happen, or there would be a way in which they could reassure their customers that that wouldn't happen.

00:13:52:13 - 00:13:57:11
Unknown
I could see that possibly happening. Young, because I think they know that there is still skepticism around the brand.

00:13:57:11 - 00:13:59:21
Unknown
know, there's still like this element of like, startup

00:13:59:21 - 00:14:04:17
Unknown
culture as well. They do seem to still feel like a startup. And you're right, people might be afraid

00:14:04:17 - 00:14:06:10
Unknown
deposit a large amount of money into Revolut.

00:14:06:10 - 00:14:06:17
Unknown
But,

00:14:06:17 - 00:14:12:12
Unknown
I don't know. I think maybe the younger generation millennials, Gen Z is with wealth

00:14:12:12 - 00:14:20:18
Unknown
might still look to Revolut because it's just simply a cool, hip new company and they could possibly offer something really compelling for wealthier clients.

00:14:20:18 - 00:14:21:11
Unknown
Good point here.

00:14:21:11 - 00:14:28:08
Unknown
when you do look at the bear case, yeah, there is skepticism around Revolut like we just mentioned, but there's also problems in the US

00:14:28:08 - 00:14:32:06
Unknown
they've tried in the past to expand into the US and get a license, and they have found it difficult.

00:14:32:06 - 00:14:35:15
Unknown
Now they're talking about buying a US bank as a means of circumventing,

00:14:35:15 - 00:14:40:23
Unknown
getting a license. And the difficulties that they could face just by a banks. You can have the license immediately.

00:14:40:23 - 00:14:42:12
Unknown
Even Starling are looking to do that.

00:14:42:12 - 00:14:46:13
Unknown
But that is also part of the bear case. It's like difficulty getting into the US markets.

00:14:46:13 - 00:14:48:06
Unknown
I think, yeah, and this is quite interesting.

00:14:48:06 - 00:14:51:03
Unknown
A large proportion of their revenue comes through

00:14:51:03 - 00:14:53:17
Unknown
interest income made on their deposits.

00:14:53:17 - 00:14:57:04
Unknown
And this is the same for a lot of fintech like wise for example,

00:14:57:04 - 00:15:01:01
Unknown
Like what would happen. Yeah. If rates start to come back down

00:15:01:01 - 00:15:03:08
Unknown
Yeah, that will definitely hurt the growth story.

00:15:03:08 - 00:15:04:00
Unknown
which this

00:15:04:00 - 00:15:08:06
Unknown
crazy valuation is based on. Right. That's a good question, Johnny.

00:15:08:06 - 00:15:18:08
Unknown
Yeah. Once, once economic growth slows down on the economy. So it's down a little, then interest rates move forward and revolute will stop earning that much interest income.

00:15:18:08 - 00:15:21:10
Unknown
Yeah. In 2020 fours $1 billion.

00:15:21:10 - 00:15:24:04
Unknown
25% of their total income, isn't it?

00:15:24:08 - 00:15:46:02
Unknown
Yeah yeah yeah from interest. And so central banks will start to reduce rates. We've seen it from the ECB. The UK is a little slower. But it's I mean you you expect it to happen. It's taking a lot longer than I initially expected it to but it should eventually happen. Revolut will be aware of this. And in the meantime they'll be trying to find other ways to drive revenue.

00:15:46:02 - 00:15:58:15
Unknown
So they'll be, subscription products, obviously car transactions. So the more customers you have, the more car transaction fees you can go on a revenue from. What else have we got? We got wealth. So we got investment stocks and shares trading.

00:15:58:15 - 00:16:03:04
Unknown
Sims, I imagine that's a pretty small driver of revenue, but it will contribute.

00:16:03:04 - 00:16:06:09
Unknown
They'll definitely be thinking about ways in which they can drive.

00:16:06:09 - 00:16:15:15
Unknown
Revenue might come at the detriment of their customers. You know, valuations like this, while great for Revolut shareholders and the founders

00:16:15:15 - 00:16:29:05
Unknown
But customers, will they benefit from a valuation like this. Yes. Revolut can raise more money and improve their services. But what does it mean when shareholders start wanting to see real return on investment?

00:16:29:05 - 00:16:31:01
Unknown
that when we get in shit's vacation?

00:16:31:01 - 00:16:48:18
Unknown
a good point. And, yeah, I do see that happening. They aren't a lot of pressure to keep this growth story intact, and at some point, it will just run out of ideas. To, Yeah, to make new money. And what what's going to happen is that they will either. Yeah. Quietly, reduce the service quality,

00:16:48:18 - 00:16:50:17
Unknown
know, or raise fees

00:16:50:17 - 00:16:51:19
Unknown
Have we already seen that?

00:16:52:04 - 00:17:07:16
Unknown
I believe so with the revenue rate, for example, used to be used to be closer to the mid-market rate. If I remember correctly. Now it's quite, quite a lot of, to a point where I personally try to avoid paying with my revolute cut when I'm abroad, and I'd rather use wise instead,

00:17:08:02 - 00:17:08:19
Unknown
Wow.

00:17:08:19 - 00:17:22:21
Unknown
yeah. No. I'm still quite surprised that the weekend fee exists, to be honest, because it's so uncompetitive. You know, for so many years I was telling people you need to exchange currency on a Friday to avoid the weekend fees that you've got in your account like that at this point,

00:17:22:21 - 00:17:31:12
Unknown
feels ridiculous to tell people to do, because you could just in the UK at least you could just have a Starling Bank card and just use that Monday to Sunday and get great rates.

00:17:31:12 - 00:17:56:12
Unknown
As good as Revolut, if not arguably better at this point. Revolut it's rate is probably where it was the mid-market rate before, where it was as good as it is as you could possibly get. It's now. It's probably no better than Mastercard's rate, which has a small margin. And that's what I'm talking about. Yann, as investors want to see return on investment, we're going to probably see things like greater spread, greater margins on FX transfers, for example.

00:17:56:14 - 00:17:58:06
Unknown
Yep. That's realistic.

00:17:58:06 - 00:18:14:13
Unknown
They recently increased the fees or the cost of the plans. So I don't think that's going to happen immediately. But then again, this is part of the bear case. It's like at some point this valuation, they need to live up to it. And as they try to increase prices,

00:18:14:13 - 00:18:18:07
Unknown
arguably growth may slow down, referrals may like may weaken.

00:18:18:07 - 00:18:21:13
Unknown
They might not be getting that 6,568% of organic growth.

00:18:21:13 - 00:18:37:05
Unknown
to be honest with you, Yann, I don't know about you, do you? Day to day like you used to, I imagine recommend Revolut like I was always recommending Revolut people when they'd ask me about travel. But now, depending where they are in the world, if they're from the UK, I'm like, have you seen Starling?

00:18:37:07 - 00:18:43:12
Unknown
You know, have you seen Monzo? Have you seen Chase UK? Because banks these days have a pretty compelling offer for just spending internationally.

00:18:43:12 - 00:18:53:20
Unknown
Yeah, you're absolutely right, John. It really depends on where that person is based. And if they're based in the UK, would not recommend, revenue under any circumstance to much better options out there.

00:18:53:20 - 00:19:01:11
Unknown
so where do you think this 60 this, this large organic growth referral growth comes from? Do you think it's European Union

00:19:01:11 - 00:19:06:03
Unknown
customers because the banks in the EU aren't still up to scratch?

00:19:06:12 - 00:19:22:15
Unknown
I think it's across the board, to be honest. And I think it's also due to the fact that a lot of people are just not really informed, when it comes to mid-market rates and, interbank fees, etc.. So they just they're just looking for convenient banking options and,

00:19:24:04 - 00:19:25:22
Unknown
take my mother as an example.

00:19:26:00 - 00:19:38:01
Unknown
My mother, has banked with her her legacy bank for, for decades. Right. And when I told her first about, N26, which is kind of which used to be the German revolute, she was all hyped.

00:19:38:01 - 00:19:44:17
Unknown
Because she wasn't used to, doing doing a whole banking, just on her phone. Right. She would always drive to the branch.

00:19:44:20 - 00:19:49:02
Unknown
And I believe a lot of people in a similar situation. And, maybe that's just enough

00:19:49:02 - 00:19:50:11
Unknown
Yeah, yeah.

00:19:50:11 - 00:20:12:22
Unknown
It's still surprising to me to think that even in 2025, the, the idea that people are still really attached to their legacy bank and even visiting their branch is still so significant. But you're absolutely right. And that means that Revolut, it still is really significant. And that means that Revolut will still have a huge amount of customers that they can acquire.

00:20:12:23 - 00:20:22:08
Unknown
I mean, in the grand scheme of things as well, 50 million, you know, it's not that big. So that many people, there's still millions and millions more people that they can acquire

00:20:22:08 - 00:20:23:22
Unknown
With billions. Potentially.

00:20:23:22 - 00:20:34:17
Unknown
I mean, if we look at some of the lessons from history, some of the things that we can get, if we look at companies that have gone from having bumper valuations and have actually succeeded in have failed.

00:20:34:17 - 00:20:51:18
Unknown
If you look at a company like Amazon, who in the noughties were valued around $20 billion with no profit whatsoever, the potential customers that they could target was essentially the entire world because they were willing to sell anything.

00:20:51:18 - 00:20:55:01
Unknown
And it's a similar position to what Revolut are in because they're building a super app.

00:20:55:01 - 00:21:08:08
Unknown
And that gives them this huge audience of customers. And it worked extremely well for, for Amazon. Right. In hindsight, $20 billion looks it looks pretty good. That's pretty cheap.

00:21:08:08 - 00:21:14:15
Unknown
Right. Yeah, absolutely. Totally changed the math here. And, could happen to to Revolut as well. Right.

00:21:14:15 - 00:21:21:23
Unknown
I'm not sure if if wealth, credit or I could be could be one of these AWS like enablers

00:21:24:02 - 00:21:28:18
Unknown
That's a good point.

00:21:28:18 - 00:21:33:19
Unknown
So they're expecting Revolut to come up with something very innovative, that could change the whole economics

00:21:41:20 - 00:22:08:23
Unknown
they are being valued then on potential innovation that hasn't actually happened yet. So someone's going they might do something dramatic. Is that what you're saying. Because Amazon probably no one expected AWS. AWS was the result of technology modernization. But no one saw that coming initially at the early noughties. But it happened. And then so the for some people, the investment paid off.

00:22:09:00 - 00:22:17:13
Unknown
See, what you're saying is people are investing in revenue now and this valuation is a result of people going well. They might do something impressive. They might.

00:22:17:13 - 00:22:31:04
Unknown
Right. Yeah. They might, and we don't know what facts investors are basing this decision on. You know, Revolut is not a publicly traded company, so they're they're not, required to report anything that happens within their business to the

00:22:31:04 - 00:22:32:20
Unknown
to the, public.

00:22:32:20 - 00:22:38:14
Unknown
you don't know what happens when they when they're, pitching to investors in order to raise these, these sums.

00:22:39:15 - 00:22:50:16
Unknown
kind of, facts they're talking about? And maybe there's something something in there, something hidden that, very well justifies the fact that Revolut is valued at $75 billion and potentially

00:22:50:16 - 00:22:57:12
Unknown
There has to be some AI buzzwords in that pitch deck. I'm sure there is.

00:22:57:12 - 00:23:04:09
Unknown
by 2030. Right. It's 100 x in, well, in 2025, it's four and a half years.

00:23:06:16 - 00:23:17:02
Unknown
That's going to be, is it's, I think it's revenue.

00:23:17:02 - 00:23:30:07
Unknown
It's a similar scenario to Tesla isn't it? Tesla beginning as an electricity car company but also starting to sell energy, software. They start to package it up and and also they start to sell to investors the idea of something special,

00:23:30:07 - 00:23:43:09
Unknown
like full self-driving, for example, or as they were calling it, I believe, autopilot, which is a mountain to not really be full self-driving, as we've found out, and it seems to be almost fraudulent at this stage.

00:23:43:11 - 00:23:55:18
Unknown
And I think this is something that Revolut may have to go and do, and they may have to promise something that they might not necessarily be able to deliver right now. But the future. But in the future, they might be able to

00:23:55:18 - 00:24:04:17
Unknown
Tesla, Amazon still exist, as did this company that I'm going to mention now. But they also had a huge fall from grace.

00:24:04:17 - 00:24:05:14
Unknown
And that is

00:24:05:14 - 00:24:06:18
Unknown
we work on

00:24:06:18 - 00:24:08:10
Unknown
a company once valued at,

00:24:08:10 - 00:24:10:16
Unknown
I think, $50 billion. Is that correct?

00:24:12:10 - 00:24:21:15
Unknown
Ultimately it turned out that they would just, I guess, property rental business. But they initially sold the idea of being like a technology company,

00:24:21:15 - 00:24:35:15
Unknown
they sold investors the idea that they may have the next best thing in terms of, I don't know, leasing tech. I don't I don't really know. But what I do know is that we work is a colossal failure.

00:24:35:17 - 00:24:42:00
Unknown
It's still an organization that exists today, but in the grand scheme of what they were originally valued as, they failed.

00:24:42:00 - 00:24:44:04
Unknown
who lost a lot of money with, with WeWork?

00:24:44:04 - 00:24:50:12
Unknown
SoftBank. It was it was I think the the biggest failure in recent years. They lost billions of dollars. Right. The people that just,

00:24:50:12 - 00:24:53:11
Unknown
participated in Revolut secondary share sale,

00:24:53:11 - 00:24:55:05
Unknown
and the investors and Revolut.

00:24:55:05 - 00:24:55:17
Unknown
Which

00:24:55:17 - 00:24:56:19
Unknown
tells you that

00:24:56:19 - 00:25:01:21
Unknown
SoftBank. And what is it Masayoshi Son I believe the guy who, who, who run SoftBank.

00:25:01:21 - 00:25:29:18
Unknown
He's obviously someone who is looking for I guess just people who are crazy like Adam Neumann. The guy who founded we work Nicholas Bronski. It's got to be a little bit crazy there, you know, idea people that the entrepreneurs that like to think of themselves as, as pioneers of industries, people that will just dream of something and instead of not trying to execute on it or giving up on it, they will push hard to achieve that dream.

00:25:29:18 - 00:25:48:04
Unknown
And again, it's similar to we Work. Is this just a roll of the dice is revenue valuation. But it's a ton of pressure on revenue. Revenue isn't it. Yeah. It's like it's a high stakes game now isn't it. It's like you have to execute on this at this point. You you got to pull it off because that valuation will come crashing back down.

00:25:48:04 - 00:25:58:10
Unknown
If any sign of potential failure. So the question is are they Amazon or are they we work.

00:25:58:12 - 00:26:08:04
Unknown
What do you think. Come on. What do you think. What do you think. Yeah.

00:26:08:06 - 00:26:14:17
Unknown
Oh that's Doug. Go. Doug, don't. That's that's. No, you can't be 50ft. Come on, come on. Roll the dice.

00:26:14:17 - 00:26:19:10
Unknown
So I see I personally see revenue's valuation plummeting. Not

00:26:20:11 - 00:26:21:05
Unknown
Oh!

00:26:21:05 - 00:26:43:03
Unknown
low, but I think 75 billion is a little ambitious considering the the information that's available to me right now. Right. If they're working on something very innovative. Secret product that's going to going to, yeah, open the doors for for much more revenue in the future, then I would instantly change my, my point of view here.

00:26:43:05 - 00:26:50:05
Unknown
But considering the facts that are available to me, 75 billion at $1 billion of annual profit, it's a little high.

00:26:51:13 - 00:27:23:20
Unknown
Is a very safe answer. Yen. Is that a very. That's a very German response. I feel very safe and very smart. I think I'll take the English approach and be speculative and risky and say that I think that they may pull this off. I'm saddened in some ways that they're being valued at what the possible future outlook could be and know what they're worth now, which I would rather they were valued at what they were, now and still able to raise $2 billion or pounds, because ultimately that money can be reinvested and help them grow.

00:27:23:20 - 00:27:43:09
Unknown
But also when you put the pressure on the valuation, it puts pressure on stakeholders. It puts pressure on people who work at the company. It means that they can fall from grace, grace a lot faster, which could impact their ability to get fully licensed as a bank. And you know, impact the way the regulators, perceive them. But I do think that they can pull this off.

00:27:43:11 - 00:27:50:12
Unknown
And I'm going to say that I think that they will be worth far more than $75 billion in the future. And I think they will become one of the largest banks in the world.

00:27:50:12 - 00:27:58:23
Unknown
I think that will be an eventuality, and I think it will be driven by, in some aspects, artificial intelligence, their ability to use AI to,

00:27:58:23 - 00:28:01:21
Unknown
issue, loans and, and lending products a lot faster.

00:28:01:21 - 00:28:03:12
Unknown
I think I will play a big part in that.

00:28:03:12 - 00:28:07:10
Unknown
really happy for the people that invest in Revolut early on. Yeah, and I think that's,

00:28:07:10 - 00:28:10:10
Unknown
you know, a fantastic result for some of those early investors,

00:28:10:12 - 00:28:11:23
Unknown
And employees.

00:28:12:01 - 00:28:13:04
Unknown
Employees. Yeah.

00:28:13:04 - 00:28:14:07
Unknown
And as a result,

00:28:14:07 - 00:28:21:18
Unknown
that wealth because those people are probably young and looking to work more, they will reinvest in new startups.

00:28:21:20 - 00:28:40:13
Unknown
So as a result, you've got this like Revolut, alumni of startups. And those startups could lead to future fintech innovations and new organizations. Maybe some of them will even challenge Revolut, which is quite interesting. Yes.

00:28:53:19 - 00:28:56:20
Unknown
My strategy would probably not to be, not to buy immediately.

00:28:56:20 - 00:29:21:22
Unknown
I would, I would never buy immediately. I'm not, you know, going to buy a company immediately after the IPO. I just got burnt doing that in the past. So from experience, I don't do that. I would eventually buy shares. I would see where it settles. And then I would eventually buy shares and, you know, you know, I'm just small time, but, yeah, probably hoover up 500, maybe a thousand.

00:29:21:23 - 00:29:33:11
Unknown
I think it would settle. I think it'll IPO a very aggressive price. I couldn't tell you. I couldn't tell you, but I just know that I would anticipate probably a decline of 10 to 15%, at least.

00:29:33:22 - 00:29:36:19
Unknown
So closer to 75 billion that right now.

00:29:36:19 - 00:29:45:15
Unknown
Okay. Yeah. So probably. Yeah. If they, if they IPO had a market capitalization of 100 billion. Yeah. Possibly 75 billion as they are now.

00:29:45:17 - 00:29:54:01
Unknown
Yeah. Look, this is only my experience with IPOs. But I've been burnt. I've been burnt where I've seen companies just immediately drop down. I mean, to the point where I invested in an e-commerce company

00:29:54:01 - 00:29:58:16
Unknown
I bought shares at $100 a share. And I think today it trades about 4 or $5 a share.

00:29:58:16 - 00:30:01:16
Unknown
think I'd like to hear what people's take on this is yarn.

00:30:01:16 - 00:30:09:22
Unknown
Like, I'd love to know if people think like Yan that Revolut won't live up to this valuation. Or like me, they will.

00:30:09:22 - 00:30:19:22
Unknown
I think it'd be really interesting to hear what people have to say about that. Like, as a Revolut user, you know, personally, as a Revolut user, I do feel quite strongly that the app has so much potential.

00:30:19:23 - 00:30:29:09
Unknown
But Yan, you're also Revolut user, you are Revolut user and you don't necessarily see the potential, which I think is pretty fascinating. So if you're watching this or if you're listening to this,

00:30:29:09 - 00:30:33:03
Unknown
get in the comments. Let's get a discussion going as we'd love to hear from you.

00:30:33:07 - 00:30:36:17
Unknown
We'd love to know what you think about this valuation.

00:30:36:17 - 00:30:39:07
Unknown
whether you're leaning more, more towards Johnny's side

00:30:39:07 - 00:30:43:18
Unknown
or towards my side which are vastly different which, which I personally find interesting as well. Right.

00:30:43:22 - 00:31:00:04
Unknown
You're much more sensible than I am. I think. Having had discussions with you regarding, like, investments and trading strategies, which long term listeners of this, of this show will have heard as well, I think you're more sensible than I am.

00:31:00:04 - 00:31:01:18
Unknown
And maybe that's what I'm showing here.

00:31:01:18 - 00:31:05:02
Unknown
And if you are watching this, please on YouTube, please do subscribe to the channel.

00:31:05:05 - 00:31:10:18
Unknown
Drop a like on this video if you enjoyed it. That's one of the best ways that you can support Yann. And I would really appreciate it.

00:31:10:18 - 00:31:12:10
Unknown
And rate us with five stars if

00:31:13:16 - 00:31:16:19
Unknown
I've never asked for that. Okay. Yeah, please. Five stars.

00:31:16:19 - 00:31:18:19
Unknown
I think next week we're going to talk about Revolut Ultra.

00:31:22:18 - 00:31:23:06
Unknown
Goodbye.