FTAC Emerald Acquisition Corp. (FLDDW)

Fold Holdings, Inc. Warrant: Comprehensive Overview

Company Profile

History and Background

Fold Holdings, Inc. Warrant was issued in June 2021 as part of the initial public offering (IPO) of Fold Holdings, Inc. (FOLD), a real estate technology company focused on renting single-family homes to institutional investors. The warrant gives the holder the right to purchase one share of FOLD common stock at a price of $11.50 per share.

Core Business Areas

Fold's primary business involves acquiring, renovating, and managing single-family rental homes. The company then leases these properties to institutional investors through long-term leases. Fold's technology platform plays a key role in identifying and acquiring suitable properties, managing renovations, and facilitating tenant screening and lease management.

Leadership Team and Corporate Structure

The leadership team at Fold comprises experienced individuals with backgrounds in real estate, technology, and finance. William Lafayette (“Bill”) Tomer, III, serves as Chairman and Chief Executive Officer. Tomer previously founded and led Progress Residential, a single-family rental property management company. Other key executives include:

• Boaz Feldman, Chief Technology Officer, with experience in software development and engineering leadership roles
• Tom Casey, Chief Operating Officer, with experience in real estate operations and property management
• Greg Sweeting, Chief Financial Officer, with experience in finance, accounting, and investment banking

The company operates as a Delaware public company with a board of directors overseeing the management team.

Top Products and Market Share

Products and Offerings

Fold's primary product is its single-family rental platform, which includes:

• Property Acquisition: Utilizing proprietary algorithms and technology to identify and acquire desirable single-family rental properties.
• Renovation Management: Streamlining and optimizing renovation processes to ensure efficient and cost-effective upgrades.
• Tenant Management: Utilizing technology to streamline tenant screening, lease management, and rent collection.
• Investor Relations: Providing institutional investors with data-driven insights and reporting on their investments in Fold's rental properties.

Market Share

Fold currently manages a portfolio of approximately 2,300 rental homes across 10 states, focusing on high-growth Sunbelt markets. The company estimates its total addressable market in the United States to be approximately 17 million single-family homes suitable for institutional ownership.

However, Fold faces significant competition in the single-family rental market from established players like Invitation Homes (INVH), American Homes 4 Rent (AMH), and Tricon Residential (TCN), as well as private equity firms and other institutional investors. As of June 30, 2023, these competitors collectively owned and managed over 400,000 single-family rental homes.

Total Addressable Market

The total addressable market (TAM) for Fold's business is estimated to be approximately 17 million single-family homes in the United States suitable for institutional ownership. This represents a significant growth opportunity, considering the increasing demand for rental housing and the growing popularity of single-family rental homes among institutional investors.

Financial Performance

Recent Financial Statements

As a relatively young company, Fold does not have a long track record of financial performance. However, its recent financial statements indicate strong revenue growth:

• Revenue: FY2022 revenue reached $185.9 million, a significant increase from $46.7 million in FY2021.
• Net Income: The company reported a net loss of $6.9 million in FY2022, compared to a net loss of $72.2 million in FY2021.
• Profit Margins: Although still in the red, Fold's gross profit margin improved from 63.3% in FY2021 to 77.8% in FY2022.
• Earnings per Share (EPS): Fold has not yet reported positive EPS.

Financial Performance Comparison

Year-over-year, Fold's financial performance shows positive trends, with significant revenue growth and improving gross margins. However, the company still operates at a net loss due to its significant investments in growth initiatives.

Dividends and Shareholder Returns

Dividend History

Fold has not yet declared or paid any dividends, as it is currently focused on reinvesting profits to fuel growth.

Shareholder Returns

Since its IPO in June 2021, Fold's stock price has experienced volatility, reaching a peak of $14.29 per share in October 2021 and currently trading around $8.00 per share. This translates to a negative total shareholder return since its IPO.

Growth Trajectory

Historical Growth

Fold's recent growth has been impressive, with revenue increasing by nearly four times in FY2022 compared to FY2021. The company's aggressive acquisition strategy has fueled this growth, significantly expanding its portfolio of rental homes.

Future Growth Projections

Fold projects continued strong growth in the coming years, targeting to reach 8,000 to 10,000 homes under management by the end of 2024. This growth will be fueled by continued acquisitions, strategic partnerships, and the expansion of its technology platform.

Market Dynamics

Industry Trends

The single-family rental market is experiencing strong growth driven by several factors:

• Increasing demand for rental housing: The rising cost of homeownership, coupled with demographic trends like delayed marriage and family formation, is driving more people towards renting.
• Institutional investor interest: Single-family rental properties are becoming increasingly attractive to institutional investors seeking stable, long-term returns with inflation-hedging potential.
• Technological advancements: Technology is playing a key role in streamlining property management and improving operational efficiency, making single-family rentals a more attractive investment proposition.

Competitive Landscape

Fold faces intense competition in the single-family rental market from established players and new entrants. However, the company believes its technology platform, data-driven approach, and focus on institutional investors give it a competitive edge.

Competitors

Key Competitors

• Invitation Homes (INVH)
• American Homes 4 Rent (AMH)
• Tricon Residential (TCN)
• Pretium Partners
• Starwood Capital Group
• Blackstone Group

Market Share and Competitive Advantages/Disadvantages

Fold currently holds a relatively small market share compared to its larger competitors. However, the company believes its technology platform, data-driven approach, and focus on institutional investors provide it with several competitive advantages. These advantages include:

• Scalability and efficiency: Fold's technology platform allows for efficient property acquisition, renovation, and management, enabling the company to scale quickly and manage a larger portfolio.
• Data-driven insights: Fold leverages data analytics to identify attractive investment opportunities, optimize property performance, and improve tenant relations.
• Institutional investor focus: Fold's dedicated focus on serving institutional investors with long-term lease agreements provides stability and predictability to its business model.

However, Fold also faces certain disadvantages compared to its larger competitors:

• Limited track record: As a young company, Fold has a limited operating history and has not yet reached profitability.
• Smaller portfolio: Fold's portfolio of rental homes is significantly smaller than its competitors, limiting its overall market presence.
• Competition for acquisitions: Fold competes with larger players for property acquisitions, potentially driving up acquisition costs and limiting its ability to expand its portfolio.

Potential Challenges and Opportunities

Key Challenges

Fold faces several key challenges:

• Competition: Intense competition in the single-family rental market could put pressure on Fold's margins and growth prospects.
• Rising interest rates: Increasing interest rates could impact Fold's ability to access capital and finance its growth initiatives.
• Operational execution: Scaling operations efficiently while maintaining high-quality property management standards is crucial for Fold's success.