Revolut has an ambitious goal: to build the world's most powerful financial app. The company wants to give people and businesses greater control of their finances so they can make better-informed decisions about how they spend, save, and grow their money.
The company has come a long way in a short period. It started in the U.K. in 2015, offering transfers and foreign exchange faster and cheaper than traditional banks.
Since then, it has grown into a global financial powerhouse with more than 45 million customers across 38 countries. It's the No. 1 downloaded finance app in 11 countries (and in the top three in another 21). The company is launching new products and expanding to more countries worldwide to continue growing its reach.
Revolut's revolutionary approach and rapid growth are making it a widely anticipated initial public offering (IPO). The company's products and growth potential might have you interested in investing in its stock. Here's a guide to everything you need to know about how to invest in stocks like Revolut and the company ahead of its eventual IPO.
IPO
As of late 2024, it had almost 9.4 million members, up 35% from the previous year. After years of posting losses, SoFi finally turned the corner on profitability in 2024.
People who want to buy one of these Revolut alternatives can purchase shares in any brokerage account. Here's a step-by-step guide to investing in these fintech companies.
Step 1: Open a brokerage account
You'll have to open and fund a brokerage account before buying shares of any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take your time to research the brokers to find the best one for you.
Step 2: Figure out your budget
Before making your first trade, you'll need to determine a budget for how much money you want to invest. You'll then want to decide how to allocate that money. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years.
You don't have to get there on the first day, though. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.
Step 3: Do your research
It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term.
Step 4: Place an order
Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The stock ticker (NU for Nu Holdings, PYPL for PayPal, or SOFI for SoFi Technologies).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.
Once you complete the order page, click to submit your trade and become a shareholder of one of these Revolut alternatives. Investors would follow a similar process to buy an IPO stock like Revolut when it goes public. Once shares become available, select Revolut's chosen stock ticker to buy shares through your brokerage account.
Is Revolut profitable?
Private companies like Revolut don't have to report quarterly earnings like public companies. However, with the company gearing up for an IPO, it reported financial results in its annual report for 2023.
According to its report, the company generated $2.2 billion in revenue in 2023, a 95% increase from 2022. Meanwhile, profit before tax was $545 million, and net profit was $428 million, with a net profit margin of 19%. CEO Nik Storonsky noted in the report that 2024 marked the company's third consecutive profitable year.
The company expected that trend to continue. Storonsky said the company "remains poised for exponential growth in 2024 and beyond, continuing to redefine the financial services landscape as we've known it."
Continued profit growth will be important for Revolut as it seeks to go public. Over the long term, earnings growth has historically been the primary driver of stock price appreciation.
Should I invest in Revolut?
Since Revolut isn't publicly traded yet, investors have lots of time to research the company to determine whether they want to buy shares when it eventually completes its IPO. Here are some factors that could lead you to buy shares when the company goes public:
- You're a fan of Revolut and use its products.
- You think Revolut could disrupt the traditional banking sector.
- You believe Revolut can continue growing its revenue briskly and deliver even faster earnings growth.
- You think Revolut deserves a high valuation, given its growth prospects.
- You understand the risks of investing in IPO stocks, including that the shares could be volatile and lose value.
On the other hand, here are some reasons you might decide not to invest in Revolut's IPO:
- You don't use Revolut or prefer a competitor's platform.
- You're concerned about Revolut's competition, which could affect its ability to grow.
- You're more of a value-focused investor and think Revolut's valuation ($45 billion post-money value as of late 2024) is high for a company generating about $2.2 billion in revenue and around $400 million in annual earnings.
ETFs with exposure to Revolut
Revolut is still a private company that has yet to complete an IPO, so investors can't get passive exposure to the fintech company through an exchange-traded fund (ETF).
Exchange-Traded Fund (ETF)
However, investors interested in the fintech space can gain exposure to similar companies by investing in an ETF focused on the sector. Here are two notable fintech ETFs to consider:
- Ark Fintech Innovation ETF (NYSEMKT:ARKF): This ETF is actively managed by the well-known investor Cathie Wood. The fund typically holds 35 to 55 companies focused on the fintech theme. In late 2024, its largest holding was Coinbase (COIN -6.98%) at 10.8% of its holdings. The ETF has a reasonable ETF expense ratio of 0.75%.
- Global X FinTech ETF (NYSENKT:FINX): The Global X FinTech ETF is a passively managed fund that aims to track the Indxx Global FinTech Thematic Index. It had 61 holdings as of late 2024, led by PayPal at 7.3% of its holdings. This fund has a reasonable ETF expense ratio of 0.68%.
Related investing topicsMost Famous Investors in the World
The bottom line on Revolut
Revolut wants to be a disruptive force in the financial sector by building the world's first financial super app. It's rapidly increasing its user base, expanding into more countries, and growing its suite of products and services.
That's helping drive robust revenue growth and boosting profitability. If Revolut can continue growing its financial results, it could be an exciting IPO stock to buy when the company decides to go public.
FAQ
About the Author
Matthew DiLallo has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway and Coinbase Global. The Motley Fool recommends Nu. The Motley Fool has a disclosure policy.
