Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 25 years of experience in analyzing hundreds of companies, especially in Asia. Deep expertise in the following sectors:
- Technology (E-commerce, SaaS, Internet)
- Consumer 
- Special Situations/Deep Value Plays
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

SPACTalk: MoneyLion (ML US)-The Case Of The Missing Roar And Why We Believe It Will Return

SPACTalk: 2022 High Conviction Pair Trade Idea-Why Moneylion Is A Better Choice Than Affirm Holdings

Kakao Pay - Slightly Lower Our Base Case Valuation

Upstart Holdings - Up 1,252% from the IPO Price & A Key Comp for Kakao Pay

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Equity Bottom-Up

<header id="article-header_2-0"><p data-tooltip="Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder." data-inline-tooltip="true" data-tooltip-position-x="left" data-tooltip-position-y="top">Founded in 2013, <a href="https://www.smartkarma.com/entities/moneylion-inc" target="_blank" data-smartkarma-citation="entities:34686:1" rel="noopener">MoneyLion (ML US)</a> is a fintech company that provides lending, mobile banking, cash advances, financial advisory, and investment services including crypto trading to its users. The company aims to empower mobile banking and other financial products through machine learning and artificial intelligence technologies. Since its launch in 2013, MoneyLion has engaged with nearly 8.7 million users. </p></header><p data-tooltip="Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder." data-inline-tooltip="true" data-tooltip-position-x="left" data-tooltip-position-y="top">In February 2021,<a href="https://www.reuters.com/technology/mobile-bank-moneylion-go-public-via-blank-check-merger-29-bln-deal-2021-02-12/" target="_blank" rel="noopener"> MoneyLion</a> agreed to go public through a merger with a blank-check firm Fusion Acquisition Corp <a href="https://www.reuters.com/companies/FUSE.N" target="_blank" rel="noopener">(FUSE.N)</a>, that would value the equity of the combined company at $2.9 billion. As of 26 October 2021, MoneyLion's market cap is $1.4 billion. MoneyLion completed its public listing on the NYSE in September 2021.</p><div class="content-highlight">
<h2>Valuation</h2>
<p>Our base case valuation of MoneyLion over the next year is $9.5 per share, which would be 59% higher than current share price. Our base case valuation is based on EV/S of 7.5x using our estimated sales of $257 million in 2022. We took a 10% discount to the company's guidance sales in 2022 to be more conservative. </p>
<p>The EV/S multiple of 7.5x is about 50% discount to the average EV/S multiple of its peers, which is mainly due to its lower operating margins and size effect. However, if the company is able to generate higher sales growth and more sizeable improvement to operating margins than its peers in the next several quarters, this valuation discount is likely to decline considerably. </p>
<p>Unlike in 2H 2020 to 1Q 2021 when there was a much positive sentiment on SPACs and SPAC related mergers, this sentiment has worsened considerably in the past six months. This is probably one of the reasons why the stock has taken such a beating since going public in the past month. We would argue that the fundamentals of the company is improving and the financial metrics of MoneyLion remain solid. Therefore, we would be a Buyer of <a href="https://www.smartkarma.com/entities/moneylion-inc" target="_blank" data-smartkarma-citation="entities:34686:1" rel="noopener">MoneyLion (ML US)</a> shares at current depressed levels.</p>
</div>

Founded in 2013, MoneyLion (ML US) is a fintech company that provides lending, mobile banking, cash advances, financial advisory, and investment services including crypto trading to its users. The company aims to empower mobile banking and other financial products through machine learning and artificial intelligence technologies. Since its launch in 2013, MoneyLion has engaged with nearly 8.7 million users. In February 2021, MoneyLion agreed to go public through a merger with a blank-check firm Fusion Acquisition Corp (FUSE.N), that would value the equity of the combined company at $2.9 billion. As of 26 October 2021, MoneyLion's market cap is $1.4 billion. MoneyLion completed its public listing on the NYSE in September 2021.
Valuation
Our base case valuation of MoneyLion over the next year is $9.5 per share, which would be 59% higher than current share price. Our base case valuation is based on EV/S of 7.5x using our estimated sales of $257 million in 2022. We took a 10% discount to the company's guidance sales in 2022 to be more conservative. 
The EV/S multiple of 7.5x is about 50% discount to the average EV/S multiple of its peers, which is mainly due to its lower operating margins and size effect. However, if the company is able to generate higher sales growth and more sizeable improvement to operating margins than its peers in the next several quarters, this valuation discount is likely to decline considerably. 
Unlike in 2H 2020 to 1Q 2021 when there was a much positive sentiment on SPACs and SPAC related mergers, this sentiment has worsened considerably in the past six months. This is probably one of the reasons why the stock has taken such a beating since going public in the past month. We would argue that the fundamentals of the company is improving and the financial metrics of MoneyLion remain solid. Therefore, we would be a Buyer of MoneyLion (ML US) shares at current depressed levels.


MoneyLion - An Oversold Fintech Stock Following a SPAC Merger