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📮The Sunday Newsletter archive

Personal Finance Made Easy

Want to find the best broker for US and international stocks? Find the best credit card for 2021 or the most affordable insurance package? NerdWallet ($NRDS) can give you answers to all these questions. Tim Chen and Jacob Gibson founded NerdWallet in 2009 with just $800, and today the company is planning to go public at a $1.1 billion 👀 market value. 

NerdWallet provides educational content, tools, and calculators to help people make smarter financial decisions. Twenty million people per month visited the site on average in the first nine months of the year.

The company makes money by charging referral fees to financial services partners when users take an action; clicking, or signing up for their services, for example. It’s a high-margin business model that earned the company $280 million in revenue in the first nine months of 2021, up 48% y/y. The company was profitable in 2020, but so far this year its losses topped $29.6 million, as sales and marketing expenses soared 92% y/y.


📫Originally posted as part of the Sunday Newsletter
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Commentary

NerdWallet has become a trusted financial partner 🤝 to millions of people. The company knows that and in order to keep its good reputation, it says in the prospectus that it doesn’t always look to maximize revenue per user. Instead, it focuses on providing valuable content that will keep visitors coming back. In the short term, this might mean that it leaves money on the table, but as a finance-related site, it’s actually the right thing to do, because trust is everything.

As with most industries, services provided by financial advisors, insurance agencies, and others are increasingly going online. NerdWallet is one of the leading personal finance sites, so it’s well-positioned to benefit from the digitization of financial advice services. 

The company has priced its IPO at a midpoint price of $18 per share that translates into a P/S ratio of 3.4. It’s a reasonable or even cheap multiple as LendingTree ($TREE), a similar company that reported revenue growth of -4.6% in the first half of the year trades at 2x sales. The exact day of the listing is still a mystery. 

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