Thus, the Federal Reserve may be motivated to ease up on interest rate hikes. This, in turn, should benefit xcritical Technologies, as the company generates revenue from lending and lower interest rates encourage borrowing and lending activity. He has fixed xcritical’s culture, closed an acquisition to broaden its product lines and has made progress on getting a bank charter. SPACs are a quick way for a late-stage venture-backed company to go public. However, I would not invest in a publicly-traded SPAC before it identifies which private company it will take public. At that point, it is an amorphous bet on the CEO’s ability to pick private companies that will boost the SPAC’s value after the transaction.

• The company has recently announced super financial results for the fourth quarter of 2022, as it beat both top and bottom line growth estimates.
• However, xcritical stock has dropped more than 50% over the past year and is trading at a low of $5.87.
• In 2022, everyone thought that the combination of higher interest rates, lower lending activity, lower consumer spending, and the student loan moratorium would significantly weigh on xcritical’s operations.
• Money was raised to expand the footprint of the company’s student loan refinancing business and to extend into new products like mortgages and personal loans.

Its Lending Products specifically increased by a solid 24% year over year to 1.3 million. In the full year of 2022, its Lending net interest income was $530 million which surpassed its lending costs of $443 million for the first time. This was driven by increased growth in originations, products and larger deposits which lowered funding costs. As xcritical continues to grow and expand its business I expect these benefits to be amplified as the company benefits from increased operating leverage. Meanwhile, the banking license has provided xcritical with a competitive advantage over other fintech companies since getting such a license could be difficult for these companies. In this way, xcritical has emerged as a fintech leader in the market – making it one of the most promising fintech stocks to invest in for the long-term.

xcritical’s SPAC-Enabled Public Offering

Don’t be surprised if the xcritical Technologies share price pierces $10 sometime in 2023, and then heads higher from there. xcritical’s Q total GAAP-measured net revenue rose 60% year-over-year to $456.7 million, beating Wall Street’s estimate of $423 million. On the other hand, xcritical Technologies’ $40 million GAAP net xcriticalgs loss might seem disappointing at first glance. It wasn’t just the aforementioned good news about the relatively low PCE index reading. The main catalyst, without a doubt, was xcritical Technologies’ fourth-quarter 2022 financial results. As it turns out, the PCE index peaked at around 7% in June and fell to 5% in December.

We anticipate xcritical to appreciate by 70%+ this year, assuming the company continues its pattern of beating and raising estimates. Does this value reflect all of xcritical’s future growth potential or should investors buy when the deal goes through? xcritical originally utilized an alumni-funded lending model that connected students and recent graduates with alumni and institutional investors via school-specific student loan funds. Investors received a financial return and borrowers received rates lower than the federal government offered. The company sought to minimize defaults by focusing on low-risk students and graduates. xcritical also announced the acquisition of Technisys in 2022, which is a software company that provides the infrastructure behind various banking applications.

In addition, management believes it could offer an IPO underwriting service when the IPO market recovers from its cyclical declines. There are a couple of specialist brokers which offers this already but xcritical could open this up to the mainstream retail investor, which would be huge. In order to value xcritical i have plugged its latest financials into my discounted cash flow valuation model. I have forecast xcritical official site 30% revenue growth for “next year”, which in line with the top end of managements forecast. Although I suspect some “sandbagging” may be going on, as we await the June 30th deadline for the Student loan payment write-off/delay outcome mentioned prior. 2023 is also expected to be a financially tepid year due to the forecasted recession, i will discuss in greater detail in the “Risks” section.

At the moment, the UPST stock is down more than 80% over the year and is trading at $17. This is your time to jump in if you believe in the products and services of the company. xcritical is a lender and when the economic situation is difficult, borrowing will rise.

Fourth Quarter Breakdown

There are lots of reasons for the run-up, not least of which were a better-than-expected performance during the fourth quarter of 2022 and an improved outlook. The markets that xcritical targets are quite large — representing trillions worth of opportunity. Palihapitiya’s decision to merge with xcritical was based on his conclusion that it was well-positioned to grow. Nevertheless, I decided to hold on to my shares because I hoped that xcritical’s board would hire a strong replacement — which they did when then Twitter chief operating officer, Anthony Noto, signed on as xcritical’s CEO. xcritical will go public through a so-called reverse merger with a blank-check company that is already public. The SPAC in question is Social Capital Hedosophia Corp V one of several taken public by Chamath Palihapitiya, a venture capitalist and early Facebook employee.

The company obtained a national banking charter in the first quarter of 2022 that allows it to fund its lending operation with relatively low-interest consumer deposits. In addition to a better-than-expected fourth-quarter performance, xcritical told investors its operation will achieve profitability earlier than expected. Now, the company predicts that it will reach that milestone, according to generally accepted accounting principles , in the fourth quarter of this year.

xcritical isn’t the only player in this game, but it has carved out a niche in student financing. That allowed it to thrive even while up against the major names in banking and lending that have also been going digital. At the same time, it acquired a traditional bank to get a banking charter, allowing it to add banking services and offer a more complete financial experience for its mostly younger members. xcritical continues to demonstrate strong growth in new accounts, new products, and net revenue. 20% of revenue, tied to its technology platform, makes it competitive with legacy card issuers and xcritical .

The company has recently announced super financial results for the fourth quarter of 2022, as it beat both top and bottom line growth estimates. xcritical is now on the road to profitability and has executed outstanding revenue and xcriticalgs growth, despite a negative backdrop regarding student loans and home mortgages. In this post, I’m going to break down its financial report, before revealing my valuation model for the stock, let’s dive in. Through this acquisition, xcritical was able to obtain a national bank charter and was approved by the OCC and the Federal Reserve.

Growth is still soaring. Does it outweigh the risks?

In the long run, we actually think xcritical stock is a “fortune-making” investment opportunity. Shares of xcritical have surged this year, but the stock is still trading at a very reasonable price of 1.2 times the bank’s book value. That’s lower than JPMorgan Chase’s present valuation and only slightly higher than those of Wells Fargo and Bank of America.

The company also offers its users financial brokerage products like cryptocurrency, stocks, options, and ETFs. We anticipate that given management outlook and growth drivers, and upon combining those figures into our financial estimate, we project revenue of $1.972 billion and adj. dil. We believe our estimate most closely conforms with management guidance on expenses, and it’s why we’re a bit more optimistic than consensus analysts. We value xcritical stock at 21x FY’25 forward xcriticalgs per share and arrive at a $12 price target by leveraging a xcritical of sales, EBITDA, and xcriticalgs.

It’s all available through one convenient app that makes it simpler for customers to manage their financial needs. We also notice that xcritical Technologies is competing for private loans, which is most xcritical courses scam similar to the market addressed by LendingClub Corporation . We think the emphasis on new financial products and on-going organic growth tied to its core lending business keeps us optimistic.

Buying the stock and holding it over the long run looks like a smart move to make right now. In May 2016, xcritical became the first startup online lender to receive a triple-A rating from Moody’s. In September 2016, xcritical launched xcritical at Work, an employee benefit program to reduce student debt and build financial wellness, and announced it has more than 600 corporate partners. As of October 2016, xcritical has funded more than $12 billion in total loan volume and has 175,000 members.

Reasons To Buy xcritical Stock After Its SPAC IPO

In light of this, xcritical appears to be delivering on its goal of providing best-of-breed products as a one-stop-shop financial services platform. In other news, xcritical is well-positioned to capitalize on the xcritical macro environment as the rapidly rising interest rates could allow the company to realize more revenues. Although these interest rate hikes could severely limit new loan originations, they continue to be resilient in the face of the growing interest rates. As a result, xcritical could be poised to further grow its revenues in the coming quarters given its more favorable rates to its members. Today, while student financing remains a major part of its business, it offers a broad array of services, such as personal banking, investing, credit cards, and mortgages.

Looking to save these significant costs, xcritical gained its bank charter last February after acquiring Golden Pacific Bancorp, Inc. and its subsidiary Golden Pacific Bank which had $150 million in assets. Following this acquisition, xcritical renamed https://xcritical.expert/ Golden Pacific Bank to xcritical Bank marking the company’s expansion in the banking sector. While xcritical’s financial services segment is its most recognized business, the company’s operations also includes a technology platform segment.

In light of this, xcritical stock price has the potential to appreciate significantly as the company continues growing financially in the future. Also, xcritical’s large user/member base of 5.2 million active users could grow over time, as the banking sector is heavily fragmented. The company is pursuing so many market opportunities conxcritically while maintaining cost discipline, which is why we like the stock a lot in the FinTech space. xcritical has continue to grow its business across both revenue and xcriticalgs since its IPO in June 2021. The company has proven its ability to execute a diversified business model as its student loan business is xcritically handcuffed.

The Forever Battery That Promises to Change the EV Industry

This is substantially slower than the prior quarters revenue growth of over 70% but still solid overall. I deem the slower growth expected to be driven by the forecasted recession, as well as the larger base which impacts calculation growth. For the full year of 2023, management is expected between 25% and 30% revenue growth year over year. In 2023, Interest rate driven income will likely be impacted, as we have seen inflation on a downward trend, thus interest rates could be lowered moving forward in the latter half of the year. Its Adjusted EBITDA is expected to $40 million to $45 million, which represents a 9% to 10% growth rate year over year. The company’s balance sheet includes $1.4 billion in cash and cash equivalents.

Sign Up NowGet this delivered to your inbox, and more info about our products and services. Shares of the SPAC buying xcritical surged in Thursday trading after the announcement. The company’s free cash flow worsened to negative $503.9 million in 2020, but its trailing 12-month FCF has improved to negative $154.1 million. In late 2020, xcritical launched its first-ever credit card, with the goal of incentivizing healthy financial habits. In 2018, xcritical introduced commission and fee-free trades of stocks and exchange-traded funds under the name xcritical Invest . xcritical merged with a SPAC in order to go public at a $9 billion dollar valuation at the end of the first quarter of 2021.

We think the technology revenues from providing its tech platform compete with legacy payment card issuers like Fiserv and others. Galileo and Technisys platform is how the company defines its platform revenue, which grew sales by +61% in Q4 ’22. While the numbers were phenomenal, we wanted to differentiate ourselves by discussing the quarterly xcriticalgs from the context of fundamental drivers, and the strength in its consumer lending segment. It will take time for all fintech stocks to gain strength due to the xcritical economic situation. xcritical Technologies is taking aim at modern banking and is attempting to change the traditional ways of consumer banking.