Buy Distribution
Why I bet on Western Union over Solana, and what the market keeps getting wrong about legacy businesses.
I started looking at Western Union because I thought stablecoins could disintermediate their business. Why pay WU when you can send money anywhere in the world for a fraction of the cost on stablecoin rails? Then I realized: WU is a much better business than that framing implies, and better positioned than almost anyone to leverage stablecoins themselves. They have the brand and the distribution to do it. The key risk was whether management would act.
They were not acting. Up until recently, they were dismissive. When I placed the bet back in November 2025, I was willing to wager they eventually would, or that someone would force the issue. I am not an activist investor, but I sensed the pressure was building.
The WU CEO was on stage at the Digital Asset Summit this week, where I was speaking as well. I saw a very different CEO, making a clear case for how stablecoins would compress the cost of moving money globally.
I took risk that this would happen. But I liked my odds. At the time WU was trading at 3x P/E. Growth was declining. Plenty of businesses trade at these levels and go bankrupt. It is tempting to bet on distressed businesses. Some turn around. Others go to zero.
What I saw in WU, and still do, is distribution. A clear market leader with brand, trust, and deep insight into consumer behavior — both the reluctance to adopt new financial primitives like stablecoins and the comfort of using what is familiar. People will always pay for convenience. They trust WU. It is embedded in bodegas, convenience stores, and retail points of service where less tech-savvy consumers cash out. That is not going away overnight.
I have read the Innovator’s Dilemma. I have invested in the same technology that pretends to displace WU. But what I have come to appreciate is that distribution is very hard to build, and trust even harder — especially in financial services.
All this to say: since I placed the bet that WU would outperform Solana, it has, and then some, beating the S&P and Nasdaq along the way. Classic mean reversion.
WU was never really about WU. It was about a broader thesis on price, distribution, and the market’s chronic habit of discounting what looks old while overpaying for what looks new.
Start with the assumption that the market is right
I always assume the market is right. Then I work backwards to understand why.
For WU, I kept arriving at the same answer: the market is pricing it as a melting ice cube. A business in terminal decline, slowly being eaten by Remitly, Wise, and whatever stablecoin-native remittance startup raised a seed round last week. Maybe that is right, if management does nothing. But price is the most important variable, and at these levels there is a lot of margin of safety.
WU is a $2.8B market cap business. It was trading closer to 3x earnings when I first looked at it last year. Today it sits at 6x. $4.1B in revenue. $923M in EBITDA. $500M in net income. 12% net margin. That is not a dying business. That is a cash machine the market has given up on.
The multiple gap is real. So is the reason for it.
The “sexy” remittance operators make the contrast stark. Remitly is growing 25% per year. Wise 26%. WU revenue is declining 3.8%. That growth gap is real and the market is willing to pay for it. Remitly trades at roughly 50x trailing P/E on a 2.3% operating margin — after its stock fell nearly 50% in the past year. Wise, a stronger business by most measures, trades at 23x P/E. WU trades at 6x. I am not one to fight the market. The discount exists for a reason. But if WU executes even partially on the stablecoin pivot and earns back some growth credibility, a re-rating toward Wise-like multiples is not unreasonable — and that is a 4 to 5x from here. Full convergence with Remitly would be a 10x. I am not betting the farm on getting full credit. I am betting that the current price ascribes zero probability to any of it, which is the mispricing.
WU does more volume than either, covers 200+ countries, and generates nearly $1B in EBITDA annually. At 6x earnings you are not paying for any recovery, any technology adoption, any optionality whatsoever. The market is pricing zero upside from here. That is where the margin of safety lives.
The core thesis
This is the thesis that led me to start Inversion.
The market leaves certain businesses for dead, assuming disruption is around the corner, but gives zero credit for the brand and distribution those businesses built over decades. Layer in option value from technology adoption and the asymmetry gets interesting.
The market is structurally long technology and simultaneously short anything that looks legacy. The pace of innovation is accelerating and it feels like AI will displace everything. This is not a discussion on whether creative destruction will happen. It always does. It is a discussion on price, and what you are paying for.
Distribution is very hard to build. It takes decades of operational infrastructure, regulatory relationships, agent networks, and consumer trust. My generational thesis is that the market will always discount what looks and feels old while paying too much for shiny new things. In that pendulum of extremes, you can generate excess returns. Not by being smarter. By being patient and paying the right price.
WU is moving. Faster than expected.
Western Union’s CEO Devin McGranahan changed his tune recently. He was at the Digital Asset Summit in New York this week making a clear case for how stablecoins would compress the cost of moving money globally — flipping negative float into positive float, turning a cost center into a revenue generator. WU has now announced USDPT, their own stablecoin on Solana, ironically, issued through Anchorage Digital. The shift was catalyzed by the GENIUS Act.
This is not a small signal. For a 175-year-old remittance company to move from skepticism to launching its own stablecoin on Solana in under a years is a meaningful shift in management posture. The bear case was always that they would not act. They are acting. That alone warrants a repricing.
There is still execution risk. There always is. Everything will get disrupted eventually. The key is understanding what you are paying for the future to unfold. The downside is a 20 to 30% drawdown if revenue decline accelerates, well cushioned by a 10% dividend yield and $500M in annual net income. The upside, as laid out above, is a 4 to 5x if they earn back any growth credibility at all.
In contrast, most high-multiple technology companies are priced to perfection, and when something is priced to perfection it does not take much to derail the thesis. When something is left for dead, it does not take much to show signs of life. WU is showing signs of life.
The product vision I keep coming back to
As much as I believe in technology, it takes a long time to deploy and convince customers to use it. The more you understand technology, the more you realize it is remarkable at what it does but does not change certain core parts of human behavior. This is especially true when it comes to money. Most people will not try something new when what they have works just fine. And consumers will always pay for convenience.
Users would rather tap WU than download and learn a digital wallet. That is not ignorance. That is inertia, trust, and familiarity built over a lifetime. That inertia has real economic value. It is why WU still processes nearly 300 million transactions a year. It is why you can justify 6x earnings and collect a 10% dividend while you wait.
My core thesis and positioning is this: the greatest beneficiaries of cost-reducing technology are not the startups building it. They are the established businesses with distribution that adopt it. Whether it is stablecoins compressing the cost of moving money or AI compressing the cost of running operations, incumbent distribution is the leverage point. The startups commoditize the infrastructure. The incumbents capture the margin.
WU can lower costs through stablecoin rails while maintaining the convenience they are known for. If they are smart, they roll out a digital wallet to reduce payout commissions. Users all over the world could opt to receive and hold dollars in a WU wallet, then spend with a Visa card. If users are not cashing out, WU does not have to source liquidity in the destination market, and that further compresses costs. The distribution stays. The infrastructure gets cheaper. The margin expands. And cutting costs is something you can control, with inherently less risk than underwriting top-line growth.
That is the optionality the market is pricing at zero.
WU is one of many
I have long accepted I will never get timing right. My predictions of the future are no better than the person next to me. What I do believe is that I can generate better returns by being positioned correctly.
That positioning comes back to the same thesis every time: long durable businesses with distribution, bought at interesting prices. There is a lot of embedded optionality in those businesses. Not all will act in time. Some will die. But the ones that do will meaningfully outperform, and those gains will more than outweigh the losses.
You are now seeing General Catalyst, Thrive, and Bezos go after legacy businesses to inject AI. The opportunity set is identical for stablecoins and blockchain rails.
The Inversion thesis is simple: buy assets with distribution at the best price possible, where you have the optionality to reshape the business with technology. The displacement narrative keeps the multiples depressed. That is the entry point.
Invert, always invert. The question is not whether WU gets disrupted. It is whether you are being compensated for that risk at ~6x earnings with $923M in EBITDA. I think you are. Generously.
DISCL: Long WU. Long SOL. NFA.
Nice write-up. I think distribution is indeed underappreciated. You see this especially in Fintech where neobanks / trading firms etc. have to lure customers with all sorts of incentives.
Once you have sufficient distribution and brand, that CAC drops - it is an undervalued asset.