This was an especially horrible year for fintech companies, not only the obvious victims of the Terra/Luna and FTX meltdowns, but also for recently dominant public fintech companies like Affirm (down 91% for the year to date), Coinbase (down 86% for the year), PayPal (down 63% for the year), and Root (down 92% for the year).
There has to be some joy, however, in concluding even an abysmal year on a positive note, and so FIN is pleased to offer up a company that has, by nearly all measures, had a stellar 2022: International Money Express. In a year when the Nasdaq plummeted by 33.7%, Intermex stock is up 49%.
Intermex is primarily a remittance company that makes it easy for Latin American customers working in the United State to send money to their home countries. FIN has long maintained that the global remittance market is ripe for tech-driven disruption. (Indeed, there are strong reasons to believe that when Facebook set out a few years ago to create its own global currency, first called Libra and then Diem, the company had its eye on remittances.) The World Bank estimates that the global remittance economy in 2022 was $626 billion, up 5%, even though remittances had sunk 10% in 2021.
Intermex was not on our radar until this late December when Mark Palmer of BTIG issued an investment note (with a buy recommendation). One reason for its obscurity, which may also account for the stock’s 2022 success, is that the company is tiny; even after an enviable year its market capitalization is under $1 billion.
The company has been around since 1994, when it it first set up shop in Oregon and Washington. It was bought by a private equity firm and went public in 2018. It now operates in all 50 states, Puerto Rico, and 21 countries in Latin America and Africa.
What’s the company’s secret sauce? According to Palmer, Intermex “prefunds” wiring money, “such that immigrants who send money on a Friday can get it to their families in minutes versus days for many competitors that lack the resources to do such prefunding. This feature helps to explain which Intermex can charge a slight premium while providing a service that is supposedly commoditized.”
In November, Intermex completed its acquisition of La Nacional, for $42.3 million. This acquisition gives Intermex a market share of more than 20% in seven countries. According to Palmer, “in addition to giving the company a leading position in the Dominican Republic, it also gives them avenues of growth in Europe and provides a boost to its nascent digital business.”