Revolut bank’s valuation stretches credulity despite $15bn slump

theguardian.com:

A reduction of $15bn in the value of Revolut, the would-be “Amazon of banking”, sounds enormous until you remember the starting point.

Back in 2021, the last time the privately owned company’s valuation created a stir, the valuation was $33bn – in that case supported by a hard transaction in which SoftBank and Tiger Global Management, two established backers, led a $800m round of fresh investment.

Since the entire tech universe, or most of it, has suffered a hefty devaluation since 2021, it’s not surprising that Schroders would reach for the scissors when estimating a fair value for the comparatively modest stake in Revolut it holds in one of its investment trusts. When there are no recent transactions to use as a yardstick, valuing unlisted companies involves making judgments.

In fact, one can easily look at the Revolut valuation conundrum through the other end of the telescope and ask: isn’t $18bn still a bit punchy in today’s colder climate in tech-land?

One of the absurdities from 2021 – that Revolut was worth more than NatWest – has reversed: the rehabilitated high street lender now has a market capitalisation of £26bn versus the eight-year-old firm’s £14.2bn (in sterling terms). But one can still scan the list of FTSE 100 financial stocks and find startling comparisons.

Try Legal & General, the solid and successful asset manager and insurer, with a market capitalisation of £15bn. Can Revolut, which made a profit of £26m in 2021, really be worth almost as much as a FTSE 100 company that recently reported a 12% increase in after-tax profit to £2.3bn?

Revolut is young, growing and increasingly global (it’s just about to launch in Brazil, for instance), goes the bullish argument. The company is not being valued on today’s