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Wealthfront Corporation (WLTH)
NASDAQ:WLTH
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Wealthfront Corporation
(NASDAQ:WLTH)
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Rating:69Neutral
Price Target:
$8.50
▲(9.40% Upside)
Action:UpgradedDate:01/26/26
The score is driven primarily by strong financial performance (rapid growth, high profitability, excellent cash generation, and a de-risked balance sheet) and a generally positive earnings-call outlook. These strengths are meaningfully offset by weak technicals (oversold with bearish momentum) and limited ability to judge valuation due to missing P/E and dividend yield data.
Positive Factors
Cash generation
Consistent, high free cash flow that roughly equals reported net income indicates earnings are being converted to real cash. That strengthens internal funding for product investment, debt reduction, and optional shareholder returns, and materially reduces reliance on external financing over the next 2–6 months.
High profitability and revenue growth
Strong top-line growth paired with unusually high operating and net margins implies robust unit economics and scalable cost structure. If core revenue growth persists, elevated margins support durable earnings power, strong free cash flow generation, and reinvestment capacity across product initiatives.
De-risked balance sheet
Dramatically lower leverage and a larger equity cushion reduce bankruptcy and refinancing risk while increasing strategic optionality. A strong capital structure supports continued product investment, credit capacity for Home Lending rollout, and resilience through macro cycles over the medium term.
Negative Factors
Margin sustainability
Margins in 2025 are exceptionally elevated and flagged as potentially influenced by one-offs. If margins normalize materially, free cash flow and return metrics would compress, reducing the durability of current profitability and the company's ability to fund growth without raising costs or capital.
Interest-rate sensitivity of cash product
Significant revenue dependence on Cash Management assets leaves fee income exposed to the interest-rate cycle. Rate cuts and the company's pricing mechanics can compress yields and cause asset migration, structurally lowering revenue per dollar unless offset by scale or higher investment-advisory adoption.
New product execution risk
Home Lending is an early-stage, multi-state rollout that will require regulatory approvals, capital, and operational scale. Execution delays or higher-than-expected costs could divert management attention and capital, making revenue from mortgages uncertain and extending the timeline to meaningful contribution.
Wealthfront Corporation (WLTH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.26B
Dividend YieldN/A
Average Volume (3M)4.17M
Price to Earnings (P/E)16.8
Beta (1Y)4.37
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees359
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.21
Shares Outstanding150,120,380
10 Day Avg. Volume4,168,691
30 Day Avg. Volume4,168,691
Financial Highlights & Ratios
PEG Ratio0.07
Price to Book (P/B)8.56
Price to Sales (P/S)6.72
P/FCF Ratio16.93
Enterprise Value/Market Cap0.84
Enterprise Value/Revenue2.98
Enterprise Value/Gross Profit3.60
Enterprise Value/Ebitda7.46
Forecast
1Y Price Target
$15.29Price Target Upside96.73% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)0.58
Revenue Forecast (FY)$414.87M
Wealthfront Corporation Business Overview & Revenue Model
Company DescriptionWealthfront Corporation is a privately owned investment manager. It primarily provides its services to individuals. It also caters to high net worth individuals, charitable organizations, and corporations. The firm invests in the public equity and fixed income funds. It also invests in mutual funds and exchange traded funds. It conducts in-house research to make its investments. Wealthfront Corporation was formerly known as Wealthfront Inc. and is based in Redwood City, California with an additional office in Palo Alto, California.
How the Company Makes Money
Wealthfront Corporation Earnings Call Summary
Earnings Call Date:Jan 12, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Mar 11, 2026
Earnings Call Sentiment Positive
The call presented strong underlying business momentum: record revenue, platform asset growth (+21% YoY), robust adjusted EBITDA growth (+24% YoY) and high profitability metrics (47% adjusted EBITDA margin, 89% gross margin, Rule of 40 at 63%). Product innovation (Nasdaq-100 Direct, Home Lending) and cross-product adoption gains support diversified growth. Headwinds were primarily macro-driven (Fed rate cuts) that moderated Cash Management growth and temporarily compressed fees, plus a large one-time post-IPO stock-based compensation charge that will weigh on near-term GAAP results. Given the scope and scale of positive operating and financial metrics and manageable nature of the challenges, the overall tone of the call is constructive and growth-oriented.Q3-2026 Updates
Positive Updates
Successful IPO and Strengthened Balance Sheet
Completed IPO in December 2025; post-IPO fully diluted share count ~189 million; expanded revolving credit facility to $250 million (from $50 million); cash and cash equivalents of $266 million at quarter-end plus net IPO proceeds of over $130 million, bringing total cash to over $400 million.
Record Revenue and Asset Growth
Revenue of $93.2 million (quarterly record), up 16% year-over-year; Total Platform Assets of $92.8 billion at quarter-end, up 21% year-over-year.
Strong Investment Advisory Momentum
Investment Advisory assets of $45.8 billion, up 31% year-over-year; Investment Advisory revenue of $24.2 million, up 26% year-over-year; annualized Investment Advisory fee rate flat at 22 basis points.
Healthy Cash Management Scale
Cash Management assets $47.0 billion, up 14% year-over-year; average Cash Management balance $46.8 billion, up 18% year-over-year; Cash Management revenue $68.8 million, up 14% year-over-year.
Outstanding Profitability and Cash Generation
Adjusted EBITDA of $43.8 million, up 24% year-over-year with adjusted EBITDA margin of 47% (up 3 percentage points YoY); gross profit $83.0 million (record), up 15% YoY, with gross profit margin of 89%; free cash flow $41.3 million and free cash flow conversion of 94% of EBITDA.
Operational Efficiency and Rule of 40 Performance
Incremental adjusted EBITDA margin of 66%; reported Rule of 40 metric of 63% for the quarter and noted multi-quarter consistency (13th consecutive quarter above their Rule of 40 threshold).
Client and Deposit Growth
Funded clients ~1.38 million (up 20% YoY) and funded accounts ~1.78 million (up 20% YoY); total net deposits of $1.6 billion in the quarter and $9.7 billion over the trailing 12 months.
Product Innovation and Adoption
Launched Nasdaq-100 Direct (12 basis points advisory fee) and originated first Home Mortgage in Q3 with gradual roll-out (Colorado → Texas & California); several investment products (automated bond ladder, automated bond portfolio, direct indexing, stock investing) each exceed $1 billion in assets; tax-loss harvesting has generated over $1 billion in client tax savings, averaging over 7x clients' lifetime advisory fees.
Cross-Product Adoption Improving
Asset-weighted cross-product adoption at December-end was 60% (up nearly 1 percentage point vs. Q3 end and up ~2% YoY from Dec 2024); Q3 was the company's second-best quarter for total cross-product flows and best quarter ever for net cross-account transfers from cash to invest.
Negative Updates
Rate-Driven Cash Account Headwinds
Three Fed rate cuts across Sept–Dec 2025 led to an expected slowdown in Cash Management asset growth and temporary fee compression driven by the company's 7-day grace period (interest income reprices immediately while client APY is held for one week), contributing to a modest decline in the annualized Cash Management fee rate to 58 basis points (down 2 bps, ~3% YoY).
Short-Term Revenue Mix Impact from Asset Migration
Assets migrating from Cash Management to Investment Advisory lower near-term revenue due to Investment Advisory's lower relative fee rate (22 bps vs. 58 bps), even though management expects longer-term benefits from faster investment asset growth.
Elevated GAAP Expense and Upcoming One-Time Charge
Total GAAP expenses rose 22% YoY; company disclosed a one-time noncash stock-based compensation charge in Q4 estimated at $245 million–$250 million due to IPO-related performance condition satisfaction, which will materially impact GAAP results in the following quarter.
Modest GAAP Net Income Growth
GAAP net income rose only 3% year-over-year to $30.9 million (EPS $0.21), a much smaller improvement than adjusted metrics, reflecting GAAP expense dynamics and foreshadowing the large one-time stock-based compensation charge.
Home Lending Early-Stage Execution Risk
Home Lending is in initial rollout with limited state license coverage (started in Colorado, expanding to Texas and California); management noted the product is early-stage, seasonally muted, and will be a multi-year effort to scale—introducing execution and timing risks to anticipated mortgage revenue capture.
Increased Operating Spend
Adjusted operating expenses (ex-SBC) were $53.7 million, up 11% YoY driven primarily by higher product development spend (partially offset by lower marketing), which increases near-term expense intensity as the company invests in product expansion.
Company Guidance
Wealthfront said it will not provide traditional quarterly guidance and will instead publish monthly metrics (first two months intra‑quarter, final month with earnings), and it expects recent Fed cuts to slow Cash Management asset growth but accelerate Investment Advisory growth as assets migrate from cash to invest while focusing on asset retention and cross‑product adoption (asset‑weighted cross‑product adoption ~60%, up ~1 ppt vs Q3). Key metrics cited: Q3 total platform assets $92.8B (Dec month‑end $93B, +21% YoY); Cash Management assets $47B (+14% YoY) with an average Cash Management balance of $46.8B (+18% YoY) and a Cash fee rate of 58 bps (‑2 bps YoY); Investment Advisory assets $45.8B (+31% YoY) with average balances $43.7B (+28% YoY) and a fee rate of 22 bps (flat); total net deposits $1.6B in the quarter and $9.7B TTM; funded clients ~1.38M and funded accounts ~1.78M (+20% YoY each, ~1.3 accounts per client). Financials referenced to frame the outlook included revenue $93.2M (+16% YoY), Cash Management revenue $68.8M (+14%), Investment Advisory revenue $24.2M (+26%), gross profit $83M (89% margin), adjusted EBITDA $43.8M (47% margin, 66% incremental margin), Rule of 40 = 63%, GAAP net income $30.9M (EPS $0.21), free cash flow $41.3M (94% FCF conversion), cash & equivalents $266M (>$400M including >$130M IPO proceeds), expanded revolver to $250M, a Q4 one‑time stock‑based comp charge of $245–250M, and a post‑IPO fully diluted share count of ~189M.Wealthfront Corporation Financial Statement Overview
Summary
Strong revenue growth and sharply higher profitability (2025 revenue up ~42.5% YoY; EBIT margin ~39%; net margin ~63%) supported by excellent cash conversion (FCF roughly matches net income) and much lower leverage (debt down to $13.4M; debt-to-equity ~0.06). Main risk is sustainability of unusually high 2025 margins, which may include non-recurring benefits.Income Statement
Profitability is very strong, with 2025 revenue of $308.9M up ~42.5% year over year and meaningfully higher margins versus 2024 (net margin ~63% vs ~36%). Operating profitability is also robust (EBIT margin ~39% in 2025), supporting high earnings power. The main weakness is that the 2025 net margin is unusually high for the industry and could be influenced by non-recurring items, so sustainability bears watching despite the strong trajectory.86
Very Positive
Balance Sheet
The balance sheet improved dramatically year over year: total debt fell to $13.4M from $87.6M and leverage is now very low (debt-to-equity ~0.06 vs ~1.89 in 2024), indicating substantially reduced financial risk. Equity also expanded strongly ($242.5M vs $46.3M), improving the capital cushion. A potential watch item is that returns on equity are extremely high in both years, which can reflect outsized profitability but can also be volatile if earnings normalize.78
Positive
Cash Flow
Cash generation is strong and scaling: operating cash flow rose to $123.2M (from $72.9M) and free cash flow to $122.6M (from $72.4M), with free cash flow growth of ~69% in 2025. Cash conversion is excellent, with free cash flow roughly matching net income in both periods (~1.0x), suggesting earnings are supported by real cash. The key weakness is limited visibility into cash flow durability beyond these periods since only two annual data points are provided.84
Very Positive
| Breakdown | TTM | Jan 2025 | Jan 2024 |
|---|---|---|---|
Income Statement | |||
| Total Revenue | 353.66M | 308.86M | 216.71M |
| Gross Profit | 292.53M | 277.89M | 193.82M |
| EBITDA | 141.35M | 127.71M | 87.61M |
| Net Income | 127.06M | 194.45M | 76.97M |
Balance Sheet | |||
| Total Assets | 810.64M | 435.21M | 231.15M |
| Cash, Cash Equivalents and Short-Term Investments | 488.19M | 180.00M | 102.21M |
| Total Debt | 11.36M | 13.35M | 87.62M |
| Total Liabilities | 458.08M | 192.67M | 184.81M |
| Stockholders Equity | 352.56M | 242.54M | 46.34M |
Cash Flow | |||
| Free Cash Flow | 107.05M | 122.62M | 72.42M |
| Operating Cash Flow | 107.72M | 123.15M | 72.92M |
| Investing Cash Flow | -1.53M | -5.84M | -5.16M |
| Financing Cash Flow | -10.32M | -58.55M | -39.50M |
Wealthfront Corporation Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $623.40M | 60.77 | 11.58% | ― | 22.27% | 117.93% | |
69 Neutral | $1.26B | 16.79 | ― | ― | ― | ― | |
67 Neutral | $787.63M | 1.60 | 9.19% | ― | 9.63% | -112.71% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
52 Neutral | $623.01M | -9.13 | -28.65% | ― | 16.40% | 22.80% | |
50 Neutral | $446.76M | 18.90 | ― | ― | -15.41% | 71.18% | |
46 Neutral | $514.62M | -0.33 | -114.93% | 8.12% | -12.37% | -754.18% |
* Technology Sector Average
WLTH
Wealthfront Corporation
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.