Revolut IPO: what to know and how to buy shares

When could the Revolut IPO happen?

The initial public offering (IPO) was initially planned for 2022, but this is now looking increasingly unlikely, according to CEO and co-founder Nikolay Storonsky.

Storonsky said in a September 2021 interview that the company would ‘need to be at least in the few billion dollars range of revenue a year’ for the flotation to be successful.

Revolut recorded a revenue of $361 million in 2021, which is a far cry from Storonsky’s indicated revenue range.

However, speculation of a possible IPO picked up momentum again earlier this year, after the company recruited former Standard Life Aberdeen joint chief executive Martin Gilbert as chairman and welcomed Michael Sherwood, the former joint UK chief executive of Goldman Sachs to its board.

A Revolut spokesman has since said that a share sale would ‘probably’ not take place in 2022. “We’ll IPO when the time is right and when we need to,” they stated, adding that the focus is on business growth in 2022.

Revolut IPO: how to buy shares if the company lists

1. Do your research on Revolut
2. Open an account
3. Search for Revolut on our platform or app and open your position

If you want to trade Revolut shares with derivatives, you would open a CFD trading account. 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.

See the UK tech stocks to watch

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.

Here are some more topics you might be interested in:

• How to trade in IPOs