In a significant development within the cryptocurrency and lending sectors, Bernstein has initiated coverage of Figure (FIGR) with an outperform rating and a striking $54 price target. This comes as Figure’s stock saw a modest gain, trading at approximately $41.10. Analysts from Bernstein highlighted Figure’s pioneering role in revolutionizing the credit markets through blockchain technology, likening its impact on lending to that of stablecoins on payment systems.
According to the report, which was released on a Monday, Figure currently dominates about 75% of the $17 billion tokenized private credit market, establishing itself as a frontrunner in this innovative field. The company’s blockchain platform aims to transition lending from a traditional, balance-sheet-intensive model to a more efficient, capital-light marketplace. This shift allows investors to gain direct access to consumer loans, enhancing the speed and efficiency of financial transactions.
“The addressable market for credit tokenization exceeds $2 trillion, providing tremendous growth headroom,” Bernstein analysts led by Gautam Chhugani remarked, indicating the immense potential for Figure as it expands beyond home equity lines into diverse loan products and even equities.
Figure has already made its mark as the leading independent home equity line of credit (HLOC) lender in the U.S., with projections estimating around $5.1 billion in originations for 2024, capturing roughly 3% of the market. Bernstein anticipates that Figure’s revenue will surge from $341 million in 2024 to an impressive $754 million by 2027, reflecting a robust annual growth rate of 30%. This growth is primarily fueled by Figure’s Connect marketplace.
While trading at approximately 19 times its expected EV/2027 EBITDA and 30 times its P/E, Bernstein suggests that Figure’s market dominance and exposure to the rapidly growing trend of tokenization justify its premium valuation. Notably, Figure recently went public, pricing its initial public offering at $25 per share, valuing the company at $787.5 million, and marking a notable entry into the market.
Figure’s Impact on the Credit Market
Key points from Bernstein’s report on Figure (FIGR):
- Market Leadership: Bernstein initiated coverage with an outperform rating and a $54 price target, highlighting Figure as a leader in integrating blockchain technology into credit markets.
- Stock Performance: Figure’s stock was noted to be 2% higher at approximately $41.10 during early trade.
- Tokenization of Assets: Figure is likened to stablecoins for lending by tokenizing traditional assets, which enhances market speed and efficiency.
- Significant Market Share: Figure holds around 75% of the $17 billion tokenized private credit market, positioning it as a clear frontrunner.
- Capital-Light Model: The blockchain platform transforms the lending process from a heavy balance-sheet model to a light capital marketplace, providing investors direct access to consumer loans.
- Growth Potential: Bernstein’s estimation shows an addressable market for credit tokenization exceeding $2 trillion, indicating vast growth opportunities for Figure as it diversifies into various loan products.
- Strong Management: A well-experienced management team and an extensive distribution network with 170 origination partners and over 15 private credit investors are noted as core strengths.
- Leading HLOC Lender: Figure is the top independent home equity line of credit (HLOC) lender in the U.S., having originated around $5.1 billion in 2024, making up roughly 3% of the market.
- Revenue Growth: Anticipated revenue growth from $341 million in 2024 to $754 million by 2027, representing a 30% annual growth rate, driven by the Connect marketplace.
- Premium Valuation: Figure trades at a premium valuation, justified by market dominance, profitability, and exposure to the growing trend of tokenization.
- IPO Success: Figure went public last month with an IPO price of $25 per share, valuing the company at $787.5 million.
Figure (FIGR): A Leader in Blockchain-Driven Credit Markets
Bernstein’s recent initiation of coverage on Figure (FIGR) positions the company as a frontrunner in effectively integrating blockchain technology into the credit market. This emerging trend has gained substantial traction, drawing comparisons to how stablecoins revolutionized payment systems. While Figure holds a significant market share with around 75% of the $17 billion tokenized private credit market, other players in this domain, such as BlockFi and Celsius, are also leveraging blockchain but may not command the same level of market influence.
Competitive Advantages: Figure’s robust platform is distinctly capital-light, a refreshing shift from the conventional balance-sheet-heavy models employed by traditional lenders. This structural change facilitates direct investments in consumer loans for investors, streamlining the lending process. The company’s extensive network of 170 origination partners enriches its marketplace and enhances its appeal to both borrowers and investors. Moreover, an ambitious market target exceeding $2 trillion hints at vast potential for growth, especially as Figure plans to diversify its offerings beyond home equity lines into other financial products.
Competitive Disadvantages: Despite its promising outlook, Figure operates in a competitive landscape where regulatory uncertainties surrounding blockchain technology could pose challenges. Companies like SoFi and Upstart are also innovating in similar areas, which intensifies market rivalry. Furthermore, the current premium valuation of approximately 19x EV/2027 EBITDA and 30x P/E could deter risk-averse investors seeking more stable options amidst the volatile nature of tech-driven equities.
Impact on Stakeholders: This initiative by Bernstein could greatly benefit institutional investors looking to diversify into innovative, tech-forward financial solutions, capitalizing on Figure’s anticipated growth. However, traditional lenders may find themselves at a disadvantage as Figure’s efficient model could siphon off customers looking for more streamlined solutions. The larger implication of Figure’s success is a potential shift in how loans are originated and funded, emphasizing the need for traditional institutions to adapt rapidly to maintain their market positions.
