Funding Circle, a so-called peer-to-peer lender, listed on the London market this week. Early trading has not gone well...
At the close of play Wednesday the share price implied a market capitalisation of £1.2bn, or a valuation several times the revenues the group is on track to take in this year.
Is that the right price? Kadhim took a look at the business model in January, considering the difference in valuation depending on whether peer-to-peer lenders valued like software companies, or as humdrum fintech aspirants. He suggested if the latter, Funding Circle would need to be heading for £400m of sales in 2019, to be worth £1.2bn.
Thumbing through the prospectus, it has a long way to go:
Somehow, cashflow has been getting worse as the company gets bigger:
Oh, and Funding Circle is capitalising some costs, £10m worth of “people costs” last year, and that headcount continues to rise fast: from 739 at New Year, to 950 at the end of June.
Still, the potential market for loans is huge:
That counts for something, right?