Can MoneyLion gain ground in the long term on the strength of its underlying businesses?

Weekly 10-Q

Can MoneyLion gain ground in the long term on the strength of its underlying businesses?

MoneyLion's Q4 2022 results show a profitable December -- however, the firm saw net losses for the quarter and year.

by SARA KHAIRI

Neobank MoneyLion reported its Q4'22 results on Wednesday, with a significant improvement in adjusted revenue despite negative earnings throughout FY'22.

Neobank MoneyLion reported a $0.74 loss per share for the quarter.

• Adjusted Revenue increased 71% to $92.4 million for the fourth quarter of 2022 compared to the fourth quarter of 2021
• Net loss of $136.2 million for the fourth quarter of 2022 versus a net loss of $32.2 million in the same quarter of 2021 -- and $190.3 million for the year. Loss widened by 41% from FY 2021
• Adjusted EBITDA was $5.6 million compared to $31.9 million in Q4 2021
• Total customer count increased 97% year on year to 6.5 million

MoneyLion went public two years ago at a $2.4 billion valuation. Fresh off its IPO, the firm experienced a rough patch with its stock down roughly 80% in November 2021, a far cry from the initial $2.4 billion enterprise value it had when the SPAC deal was first announced. 

The neobank acquired MALKA in November 2021 to create a media arm for the company. For its consumer business which is banking, investing, credit advice, and marketplace – MoneyLion acquired Even Financial, a marketplace technology that connects and matches consumers with personalized financial product recommendations from banks, insurance carriers, and fintech companies on mobile apps, websites, and other digital touchpoints, in February 2022.

Later in September 2022, the neobank’s lending activities came under fire when the Consumer Financial Protection Bureau sued the company, alleging it overstepped the Military Lending Act. 

MoneyLion allegedly charged more than the legally allowable 36% rate cap on loans to servicemembers through a combination of stated interest rates and monthly membership fees. The neobank also often refused to cancel paid memberships, according to a lawsuit filed by the CFPB.

MoneyLion was at loggerheads with the CFPB over its complaint, claiming it was false allegations.

The firm's shareholders have had a rough ride lately, with its stock price plummeting 80% last year. Although the past weeks saw a lift for owners of the stock, they're still in the red over the last year, followed by an 18% decline in the firm’s share price in February this year.

In the same month, MoneyLion partnered with Column Tax, a personal income tax software company in a move to provide a simplified tax filing experience to its RoarMoney customers.

Besides its two acquisitions, the new partnership with Column Tax illustrates the neobank’s strategy to create diversified streams that would help it increase revenue.

The neobank also launchedMoneyLion University in October last year to improve financial literacy and drive new users to its platform.

"Our strong performance in 2022 is a reflection of the investments we have made to create a durable and self-reliant ecosystem. With all of the pieces in place, we are positioned to deliver profitability at scale," said Dee Choubey, CEO MoneyLion.

MoneyLion's unit economics improved with its customer acquisition cost, which reduced to $8 during the fourth quarter compared to ARPU of $62. This decreased from $72 in the same quarter last year -- as a result, the company's payback period has been cut back in half over the same span. This has positively impacted the underlying profitability generating a gross profit of $58 million during Q4 2022. 

However, the loss was primarily driven by a one-time non-cash goodwill impairment expense of $136.8 million in the fourth quarter and full year of 2022, according to the earnings report.

The company's shares are down 8.2% from a week ago.

Market recap

Fintech stocks tumbled once again over the past week keeping markets on the edge

Fintech stocks saw a sharp fall adding to market woes of bank crises, inflationary adjustments, and growth challenges amid a macroeconomic environment.

Oportun - down 43% to $2.84 per share

• Oportun reported its fourth quarter 2022 results on Monday. In the revenue line, the company reported $261.9 million, missing estimates by $1.1 million.
• Despite revenues increasing, earnings decreased, signaling a decline in profit margins. The stock is down following the report.

Coinbase - up 17% to $67.78 per share

• Bitcoin has risen swiftly lately, it rose 10% at 3 a.m. ET Monday to $22,560.20, its highest level in 10 days, which uplifted crypto brokers like Coinbase.

Meta - up 13% to $204.93 per share

• Meta shares jumped after Zuckerberg announced more layoffs on Tuesday. However, investors are feeling bullish as the company has taken a different approach to control its spending. Zuckerberg is cutting lower-priority projects and trimming middle-management positions.

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