rent.com.au (RNT) Current price: 22.5c Market Cap: $77 million
TL;DR: RNT has everything: sexy website name, BNPL for meme value, disruptive tech, huge (global) scalability potential, a deal with ANZ bank and backing from the Slatman himself.
Bevan Slattery (henceforth referred to as the Slatman) just pulled his wallet and threw 2 million dollars in RNT's direction. Four business days later, the share price has grown +462.5% from 4c to 22.5c. I'm here to convince you that this is far from over. Do me a favour and look at what happened to 3DP and IHL after the Slatman decided to invest in them in July and August respectively. In his words, he likes to invest in "disruptive business models that challenge the status quo. If we believe in a business and invest, then our goal is to help management to grow the value of the business and by association the value of our investment. We don't invest in startups and early stage businesses to make a quick profit ‐ if we’re with you, we're there for the long haul".
He isn't just hoping that these businesses will do well, if the Slatman has eyes on you, he will personally come to your house and butter you up himself. He's clearly looking to actively help guide management in order to guarantee the value of his own investment. Look at this cheeky screenshot on LinkedIn I found where he personally pops up on a random post about rent.com.au to shut down someone calling it a pump and dump.
But I digress, this isn't even considering his other achievements and track record with companies like NextDC - take a look into it if you can, you can't deny whatever he touches turns to gold. Now that we have that out of the way, let's talk about the actual business itself.
Rent.com.au (RNT) wants to target and take over the whole renting experience. They want to take care of the entire renting lifecycle in a process that is currently typically very disjointed. There are websites like flatmates or realestate that take care of the process up to finding a place, but after that you're on your own. RNT want to combine the entire process and take care of processes that come after such as renter resume, bond, rent payment management, utilities that are sometimes very confusing or are managed by lots of different places at once. They also want to take care of transitioning from one rental to the other, combining the whole process so that you can stay in the one system the entire time.
I think what RNT does is really good for the direction that we're going. Lower interest rates and higher house prices are only increasing the amount of people renting, with Australia having ~33% renter households in 2021 and countries like USA and Germany having 37% and 49% respectively. I feel like this will only increase over time with newer generations valuing the flexibility and freedom of moving a lot more (in addition to no one being able to afford a house). Not only that but newer generations are much more willing to pay for digital solutions and convenience. I mean look at UberEats or Afterpay's success. RNT even includes a BNPL-like function with bond payments, where you won't have issues like having to front the new place's bond before you've gotten your old bond back. I'm a huge fan of scalable tech and I really think this is a good way of tying the whole renting experience together and also being able to easily expand to other regions and countries.
Their next big pipeline announcement item is the launch of the RentPay product this quarter that will allow users to manage and track rent payments automatically. This process in particular I think is currently very antiquated. I'm currently renting and I have to manually bank transfer the real estate agent every month and there's no way for me to confirm that I've paid or even easily check my payment history. It makes the jobs of real estate agents easier as well! If RNT can even successfully capture an extremely conservative 1% (only 25,000 customers in Australia) of market share with this, their analysis indicates a yearly revenue of $2.4million from rentpay, which alone almost doubles their FY2020 revenue. I have no doubt that the Slatman will have a hand in guiding this, with the timing of his investment, and he won't stop at 1%. In addition to this, in the short term, lots of leases expire early in the year, and as sad as it is, the pause on evictions in TAS and ACT due to COVID-19 hardships ended on the 31st of Jan - all resulting in heightened rental demand.
I won't delve too much with the financials since you can just go read their reports, but to summarise, 13% FY2020 revenue growth vs FY2019, 27% revenue and 55% earnings Q2 FY21 growth vs Q2 FY20, 2nd consecutive quarter of positive earnings for core rent.com.au portal business. $1.8 million cash on hand, which should last them for 13 more quarters - and that's not even including the $2.75million investment they just received from Slatman and Co. They're not going to need a raising for ages. All sounds good to me. What I'm more excited for the RentPay revenue possibilities and the potential of the fundamentals.
In the process of doing research and just want to put down some initial thoughts - let me know what your thoughts are on this!
RNT Price at posting:
22.5¢ Sentiment: Buy Disclosure: Held
(20min delay)