Revolut IPO: how to trade shares if the company lists
Here’s everything you should know about the highly anticipated initial public offering (IPO) of UK fintech unicorn, Revolut.
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When could the Revolut IPO happen?
While Revolut has not officially announced its initial public offering (IPO) date, recent developments suggest it may still be a couple of years away. The London-based fintech giant, valued at around $45 billion, appears to be prioritising a potential listing on the Nasdaq in the United States rather than in its home market of London, according to the Financial Times.
However, the UK government is actively engaging with Revolut to promote London as a listing destination. The Treasury plans for City minister Tulip Siddiq to meet with Revolut in the autumn, the Financial Times reported, likely discussing the company's listing plans among other financial services issues.
This engagement is part of a broader effort to maintain London's competitiveness as a financial hub and could potentially influence Revolut's decision on where to list.
Several factors could influence Revolut's IPO timing. Market recognition in the United States is one key consideration, with investors suggesting it would be beneficial if US long-only investors were more familiar with the company before an IPO.
Additionally, Revolut's recent acquisition of a UK banking licence after a three-year process could potentially accelerate IPO plans, as it allows the company to hold deposits directly and increase lending in the UK.
Revolut IPO: how to trade shares
- Do your research on Revolut
- Open a trading account
- Search for Revolut on our platform or app and open your position
If you want to trade Revolut shares with derivatives, you need to open a CFD trading account. CFDs incur a £10 commission on UK shares. When trading, you can go long or short and you'll trade on leverage. This means you could gain or lose money much faster than you'd expect, as your trade size is much larger than your initial outlay.
What does Revolut do?
Revolut is headquartered in London, UK. It was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko at renowned financial technology incubator Level39’s premises in Canary Wharf.
Revolut is a digital app that offers a range of traditional banking and financial services, including multi-currency (such as British pound and euro) bank accounts, debit cards, a fee-free currency exchange, commission-free stock trading, a cryptocurrency exchange, and peer-to-peer payments.
The Revolut mobile app directly supports spending and ATM withdrawals in 120 currencies, as well as transfers in 28 currencies.
It also provides crypto on-ramp services by allowing customers to use 25 fiat currencies to exchange for cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and XRP.
What is Revolut's business model?
Revolut's business model is built on disrupting traditional banking by providing cost-effective, user-friendly financial services. The company generates revenue through multiple streams, creating a diversified and resilient financial structure.
Card and interchange fees
One of Revolut's primary revenue sources is cards and interchange fees. When customers use their Revolut debit cards for purchases, the company earns revenue through interchange fees paid by merchants. Given Revolut's large user base, this high volume of transactions contributes significantly to its income.
Subscription fees
Subscription fees form another key part of Revolut's business model. The company offers premium and metal plans that provide additional benefits and features to customers for a monthly fee. These plans include perks such as higher withdrawal limits, exclusive card designs, travel insurance, and cashback on purchases, generating recurring revenue and enhancing customer loyalty.
FX transactions
Forex transactions are another substantial revenue stream for Revolut. The company offers competitive exchange rates with a small markup or fee, capitalising on its popularity among travellers and international business users.
Additionally, Revolut has expanded into wealth products, offering services like cryptocurrency trading and savings products, further diversifying its income sources.
For those interested in investing in fintech companies, understanding Revolut's diverse business model is crucial when considering potential future investment opportunities.
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Who are Revolut's competitors?
Arguably, Revolut’s biggest competitor in the multi-currency account space is Wise, in terms of the products and services offered by both platforms. While Revolut supports 33 currencies, Wise supports over 40 currencies as of August 2024.
Other global competitors in the money transfer and foreign exchange space include Wirex, PayPal, Monzo and Skrill.
What is Revolut valued at and what could the Revolut share price be?
Revolut is currently valued at around $45 billion.
This valuation puts Revolut among the most valuable fintech companies globally and even surpasses the market capitalisation of many traditional banks. The company's high valuation reflects its rapid growth, innovative services, and potential for future expansion in the competitive fintech sector.
As for Revolut's potential share price, it's important to note that the company is not yet publicly traded, so there isn't a current market-determined share price. The exact share price at IPO would depend on various factors, including market conditions at the time of listing, investor demand, and the number of shares Revolut decides to issue
What's the outlook for the Revolut IPO?
The outlook for Revolut’s IPO boils down to how much growth the company achieves and how well it does in the coming financial year.
While the company continues to add new services each year, it operates in the UK on a digital banking licence, which means it is not allowed to lend directly to users. Customer deposits are also not protected by state insurance, which could prove a roadblock further down the road.
Experts say that it is extremely difficult to secure a full banking licence in the UK, with authorities paying great attention to an applicant’s know-your-customer procedures. To circumvent this, Revolut has hired about 300 risk and compliance professionals.
On the plus side, a digital banking licence makes Revolut less scrutinised than a traditional bank.
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