Flywire Scores $10.5M Vote of Confidence—Despite 70% Plunge From Peak Valuations

Connecticut-based investment firm Ararat Capital Management is betting big on Flywire Corporation (NASDAQ:FLYW), deploying $10.5 million to acquire 774,864 shares in the third quarter. The move signals an intriguing contrarian play: while the cross-border payments specialist has cratered 38% over the past year—well underperforming the S&P 500’s 13% gain—smart money is selectively accumulating at depressed levels.

A Fresh Institutional Stake Amid Market Skepticism

According to SEC filings released November 14, Ararat established this new position as of September 30, marking their inaugural holding in the payments platform operator. At current prices around $13.63 per share, Flywire now represents 5.6% of Ararat’s $186.5 million in reportable U.S. equity holdings across 20 positions—falling outside their top-five portfolio allocations but substantial enough to reflect genuine conviction.

The fund’s existing top holdings reveal their preference for undervalued growth stories: NYSE:BY ($18.8 million, 10.1% of AUM), NASDAQ:LZ ($17.8 million, 9.5%), NASDAQ:DRVN ($17.7 million, 9.5%), NYSE:PLOW ($13.6 million, 7.3%), and NYSE:GIL ($12.6 million, 6.7%). Against this backdrop, Flywire’s entry demonstrates Ararat’s willingness to deploy capital in beaten-down equities showing operational momentum.

The Bull Case: Growth Meets Margin Expansion

What makes Ararat’s thesis compelling is Flywire’s recent operational resilience. The payments infrastructure company reported 27.6% year-over-year revenue expansion to $200.1 million last period, paired with adjusted EBITDA of $57.1 million—translating to a 29.4% margin, a 155 basis point improvement. Total Payment Volume surged 26.4% to $13.9 billion, while management extended full-year guidance reflecting healthier-than-anticipated demand trends.

Beyond raw growth, Flywire demonstrated sticky customer dynamics by onboarding more than 200 new clients. The company’s platform serves education, healthcare, travel, and B2B verticals, each with specialized software and alternative payment integrations—a competitive moat difficult for rivals to replicate.

Valuation Disconnect: Why Now?

Trading at roughly $1.7 billion market capitalization against $583 million in trailing revenue (TTM), Flywire faces persistent headwinds from its lack of profitability (TTM net loss: $2.4 million). Yet the fund’s entry suggests institutional investors see inflection risk: as cross-border payment volumes normalize post-pandemic and the company’s vertical-specific integrations deepen, scale should eventually drive meaningful bottom-line expansion.

Ararat’s conviction essentially bets that Flywire can replicate what payments giants have achieved—translating top-line growth into durable operating leverage—a challenge most fintech peers have struggled to solve during market downturns.

The Investment Thesis Forward

For long-term investors with volatility tolerance, Flywire presents a layered opportunity: a growth narrative that persists despite equity weakness, margin expansion trending favorably, and institutional accumulation at levels nearly 40% below recent highs. Whether Ararat’s contrarian stance proves prescient ultimately hinges on the company’s ability to sustain revenue momentum while expanding profitability—a test they appear positioned to pass.