Many experts shocked the market when they said that labs 15m series pantera capitalmcsweeney is just a waste of money.
Labs 15m pantera capitalmcsweeney
When labs 15m series pantera capitalmcsweeney went public in the summer of 2021, I believed the prospects for the company painted quite a blended picture. The company aimed to transform the digital banking industry, yet I wondered about the rationale behind a recent deal and exposure to a rapidly cooling mortgage market. To find out more visit https://newznav.com/sesteel/
Labs 15m series pantera capitalmcsweeney aims to redefine banking software by centering it around the consumer, as (digital) banking services have been lagging in terms of development and adoption versus many other services like biden 2t nsf 50b rdbirnbaumprotocol.
Application of loans still often takes a long period of time, and besides the time spent, there are many frictions, often the result of legacy software, paper trails, data silos and a general lack of innovation.
Founded in 2012, the idea behind Blend Labs was to make loan applications really easy, in fact as easy as buying any other product or service online. The company has seen rapid growth ever since. Services offered include lending, credit cards, deposits, all in a new interface as the business model makes sense, with Blend getting paid once a transaction is completed.
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At the time of the offering, the company served some 300 customers, including many large financial firms, as that looked quite promising, if not for the fact that origination volumes were getting pressured already, as interest rates were creeping up already.
The company went public at $18 per share, as 220 million shares outstanding translated into a $3.96 billion equity valuation, although that number included a near $600 million net cash position, reducing the operating asset valuation to $3.4 billion.
This was a huge valuation for a firm which generated a mere $50 million in sales in 2019, certainly as operating losses came in at $82 million. Revenues nearly doubled to $96 million in 2020 as losses narrowed a bit to $75 million, as the progress was impressive, yet there still was a long way to go to hit break-even levels.
Labs 15m pantera capitalmcsweeney theblock
With quarterly revenues doubling to $32 million, labs 15m pantera capitalmcsweeney theblock was valued at 26 times annualized sales, a huge multiple. That was just part of the picture as the company acquired Title365 ahead of the public offering, a title insurance company which adds $212 million in sales, acquired in a $422 million deal. This makes that sales might triple, as the high-flier core operations being valued at 20 times was acquiring a large legacy player at around 2 times sales.
The Title deal would create a business with a $340 million run rate in sales, comprised out of two-third legacy operations and its actual UNDER DELIVEROO UBER EUROPECLARK operations, leaving me a bit puzzled. Taking into account the still large losses and the fact that momentum was cooling down rapidly amidst interest rates being on the increase a bit already, as investors in other mortgage plays had already seen that the mortgage party, induced by the pandemic, was over already.
A Complete Massacre
Since the public offering, when shares traded around the $20 mark in the immediate aftermath, it has been all downhill from that point in time. By spring of this year shares had already fallen to $3 per share, effectively having traded in a $2-3 range ever since, with shares now trading around the $2 per share mark.
What happened earlier?
Earlier this year, the company posted its 2021 results with revenues reported at $234 million, and pro forma sales seen at $364 million if we account for a full year ownership of Title365. Quickly some dark signs on the horizon appeared as fourth quarter revenues of $81 million fell way short compared to the pro forma run rate of $364 million, with momentum in the mortgage market clearly on its retreat. Perhaps even worse was the performance on the bottom line with a $197 million full year operating loss leaving few reasons to become optimistic, certainly not as the fourth quarter run rate exceeded this loss.
To make things even worse, we have to look at the outlook for 2022, based on the expectation that US mortgage origination levels would fall 35% from 2021 levels. Based on this outlook, the company saw total revenues at just $230-$250 million, essentially flat compared to the 2021 numbers, but down a lot from the pro forma POINT SLINGER FOR CAMERA of course.
Labs 15m series pantera capitalmcsweeney theblock
Earlier this year, labs 15m series pantera capitalmcsweeney theblock posted first quarter sales of $71 million as operating losses of $70 million almost one-for-one matched the sales generated during the quarter. From here it was downhill as second quarter sales fell further to $65 million. The company posted a loss of half a billion, on the back of large write-downs on the Title365 purchase. Otherwise, losses still came in at $80 million, marking no progress on the cost containment front.
Third quarter sales fell all the way back to $55 million, this time accompanied by a $130 million operating loss. If we adjust for a $58 million amortization charge, operating losses came in at $72 million despite modest restructuring charges, a dismal situation by all means, although very initial signs of cost control are displayed upon https://newznav.com/hannah-owo/.
The company actually narrowed the full year guidance, now seeing sales between $235 and $240 million, implicitly saying that fourth quarter revenues are seen between $42 and $47 million, marking further sequential declines in sales.
What Now?
One of the few bright spots is that the company still holds $185 million in net cash, although at this pace the losses are eating into these cash balances at a rapid pace. With 230 million shares now trading just $2 per share, a $460 million valuation implies an operating asset valuation below the $300 million level, a huge pullback from the valuation seen at the time of the offering.
One of the few bright spots is that, outside of Title365, the company is actually keeping revenues flat year-over-year. This comes as this deal already raised questions at the time of the IPO, as it might actually be hurting the company, with the purchase price being amortized within a year already.
The reality is that mortgage markets will be pressured for some time to come while the fundamental position is getting depleted in a rapid fashion here, with no quick fixes in sight. Hence, some real cost discipline needs to be delivered on, through resetting the cost base, before I might become upbeat on the business here. Right now this remains a highly speculative play at best, very best.
