Revolut insiders think it could one day be worth $100bn
How much is Revolut worth without a UK banking license? And how much is Revolut worth with one?
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The question matters because Revolut has today achieved a UK banking licence and because it aspires, one day, to IPO, at which point some current and former employees, plus bankers who were early investors, stand to become very rich.
The extent of those riches depends on the valuation Revolut achieves. In 2019, Revolut was valued at $5.5bn. In 2021 Revolut was valued at $33bn. Last month, Revolut was valued at $40bn. Yesterday, it was reportedly targeting a valuation of $45bn.
Shareholders who benefit from the coming sale of $500m of Revolut shares will do so at the $45bn valuation. While this will be lucrative, the real money will be made in an IPO: in most previous fundraising rounds, Revolut has only allowed employees to sell 10% of their holdings.
The big question now, therefore, is how much Revolut might be worth once the new banking licence takes effect? Some ex-employees think the impact could be stratospheric.
"Revolut could be worth hundreds of billions of dollars," one former employee informs us. Multiple ex-employee shareholders tell us the licence "completely changes the game."
"The licence will allow Revolut to monetise its customer deposits in the UK, where it has roughly 8m or 10m, through lending and more sophisticated financial products," says one former senior Revolut employee. "This will be a major boost to profitability and also to customer confidence through the deposit scheme. The license approval is baked into the coming share sale valuation, but in the long term it will be a real boost."
The $100bn valuation enthusiasts point to Revolut's potential to take on established British banks with its new licence. "If you compare Revolut to HSBC, which has 38m users, you can see the potential," says one. HSBC has a market cap of $121bn. Enthusiasts say Revolut is already synonymous with banking for the younger generation. "I was in the tube and heard one teenager say to the other 'Can you Revolut me 10 quids?,'" says one.
If Revolut were to more than double its valuation again, its shareholders would become richer still. Even at the current valuation, founder Nik Storonsky stands to make £5bn+.
Whether Revolut could really be worth $100bn is open to question, though. BCG's recent fintech report said most fintechs are now only achieving valuation multiples of 4x revenues. In 2023 Revolut's revenues were $2.2bn. A $100bn valuation implies that revenues must increase 11 times.
One fintech banker suggests Revolut employees may want to get a grip. "A valuation of $100bn isn't even vaguely viable, at least not in this rate environment," he says. "It implies a P/E of 250x. All the big four UK banks are trading at less than ten times today. Even if Revolut achieves $4bn in profit, a $100bn valuation would still imply 25x P/E."
A banking licence may be transformative, but sadly not as transformative as all that.
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