Author: Santiago Roel Santos

Translation: Deep Tide TechFlow

Deep Tide Introduction: The core argument of this article is an counterintuitive judgment: the biggest beneficiaries of stablecoins are not the startup companies building them, but the established institutions that have the distribution channels.

The author bet on Western Union outperforming Solana in November 2025. The result paid off, and it also outperformed the S&P and Nasdaq.

What’s worth reading is not just the conclusion, but how he looks for opportunities using the framework of "disruption narrative lowers valuation, distribution channels are priced at zero."

The full text is as follows:

I started researching Western Union because I believed stablecoins would disrupt its business. Why pay WU fees when you can use stablecoins to transfer money anywhere in the world at minimal cost? Later, I realized that WU’s business is much stronger than this framework suggests and is more suited than almost anyone else to embrace stablecoins. It has a brand, it has distribution channels. The key risk is whether the management will act.

They had not acted before. Until recently, they seemed dismissive. When I placed my bet in November 2025, I was willing to gamble that they would ultimately act, or someone would force them to act. I'm not an activist investor, but I felt pressure was building.

This week I also spoke at the digital assets summit, and the CEO of WU took the stage. I saw a completely different CEO, who clearly articulated how stablecoins would reduce the cost of global money movement.

I took the risk of this happening, but I like my odds. At the time, WU’s price-to-earnings ratio was 3 times, and growth was declining. Many businesses trade at such valuation levels and then go bankrupt. Betting on distressed companies is tempting; some will transform, some will go to zero.

What I saw in WU then, and still see now, is the distribution channels. A market leader with a brand, trust, and deep insights into consumer behavior—who understands consumers' resistance to new financial terms like stablecoins, as well as their reliance on familiar things. People are always willing to pay for convenience. They trust WU. It is embedded in small grocery stores, convenience stores, and retail service outlets, where less tech-savvy consumers can cash out. This won’t disappear overnight.

I’ve read "The Innovator’s Dilemma," and I’ve invested in technologies that claim to replace WU itself. But I have come to realize more and more that distribution channels are very difficult to build, and trust is even harder—especially in the financial services sector.

The reason I mention this is to illustrate that since I bet on WU outperforming Solana, it has indeed outperformed, and by no small margin, and also outperformed the S&P and Nasdaq. A classic mean reversion.

Starting from the assumption that the market is right

I have always assumed that the market is right, and then deduced the reasons.

For WU, I repeatedly arrived at the same answer: the market prices it as a melting ice cube. A business headed for an end, slowly being eroded by Remitly, Wise, and some stablecoin-native remittance startup that just secured seed funding last week. If management does nothing, perhaps they are correct. But price is the most important variable, and at this valuation level, there is a substantial margin of safety.

WU’s market cap is $2.8 billion. When I first researched it last year, the price-to-earnings ratio was close to 3 times; today it is 6 times. $4.1 billion in revenue, $923 million EBITDA, $500 million net profit, 12% net margin. This is not a dying business, but a cash machine that the market has already given up on.

The gap in valuation multiples is real, and the reasons behind it are real.

WU’s business size is greater than both (referring to Remitly and Wise), covering over 200 countries, generating nearly $1 billion EBITDA each year. A 6 times price-to-earnings ratio means you are not paying for any recovery, any technology adoption, any option value. The market is pricing the future upside at zero. The margin of safety is right here.

Core Argument

This is the core argument that prompted me to establish Inversion.

The market may see some companies as death cases, assuming disruption is at hand while giving zero credit to the decades of brand and distribution channels those companies have built. Layering in the option value of technology adoption makes the asymmetry interesting.

The market structurally goes long technology while shorting anything that looks outdated. The pace of innovation is speeding up; it feels like AI will replace everything. This is not a discussion of whether creative destruction will happen—it always will. This is a discussion of price, and what you have paid for it.

WU is taking action, and faster than expected.

Western Union CEO Devin McGranahan recently changed his stance. He clearly articulated at the digital assets summit in New York this week how stablecoins will reduce the cost of global money movement—turning negative float into positive float, transforming cost centers into revenue sources. WU has now announced it will launch its own stablecoin USDPT on Solana, ironically issued through Anchorage Digital. This shift was catalyzed by the GENIUS Act.

This is not a small signal. A remittance company with a 175-year history has shifted from skepticism to launching its own stablecoin on Solana in less than a year; this is a significant change in management posture. The pessimistic argument has always been that they wouldn’t act, and now they are acting. Just that alone warrants a repricing.

Execution risk still exists, and it always will. Everything will eventually be disrupted. The key is to understand what you have paid for the future unfolding. The downside risk is a 20% to 30% drawdown when revenue declines accelerate, with a 10% dividend yield and $500 million net profit as a buffer. The upside potential, as mentioned, is 4 to 5 times once they regain any credibility for growth.

In contrast, most high-valuation tech companies are priced with perfect execution already built in, and once perfect execution is assumed, even a slight deviation can disrupt the argument. When something is seen as dying, just a little sign of life is enough. WU is showing signs of life.

The product vision I keep coming back to

While I believe in technology, deploying it and persuading customers to use it takes a long time. The more you understand technology, the more you realize it is excellent at what it does, but certain core human behaviors do not change. This is especially true when it comes to money. When the existing thing works well, most people won’t try something new. Consumers will always pay for convenience.

Users would rather click on WU than download and learn a digital wallet. This is not ignorance, but an inertia built up over a lifetime, trust, and familiarity. This inertia has real economic value. That’s why WU still processes nearly 300 million transactions a year, and why you can buy in at a 6 times price-to-earnings ratio and wait to collect a 10% dividend in the meantime.

My core argument and position are as follows: the biggest beneficiaries of cost-reducing technology are not the startups building it, but mature enterprises that adopt it and have distribution channels. Whether it is stablecoins reducing the cost of money movement or AI reducing operational costs, legacy distribution channels are the leverage points. Startups commoditize the infrastructure, while mature enterprises capture the profits.

WU can reduce costs through the stablecoin channel while maintaining its reputation for convenience. If smart enough, they will roll out a digital wallet to reduce payment commissions. Global users could choose to receive and hold dollars in a WU wallet and then spend with a Visa card. If users do not cash out, WU does not need to raise liquidity in the destination market, which further reduces costs. The distribution channels remain unchanged, the infrastructure becomes cheaper, and the margins expand. Reducing costs is something you can control, and the inherent risk is much lower than underwriting revenue growth.

This is the option value that the market prices at zero.

WU is just one of them

I have long accepted that I will never time the market perfectly. My predictions for the future are no more accurate than anyone else's. What I believe is that with the right positioning, I can achieve better returns.

This positioning always circles back to the same argument: buying resilient businesses with distribution channels at the right price. These businesses have embedded option value. Not everyone will act in time, and some will die. But those that do act will significantly outperform the broader market, and those gains will far exceed the losses.

You are now seeing General Catalyst, Thrive, and Bezos all entering traditional businesses by injecting AI. The opportunities with stablecoins and blockchain channels are the same.

The argument for Inversion is simple: buy assets with distribution channels at the best possible price while also having the option to reshape the business with technology. The disruptive narrative has lowered the valuation multiples, which becomes the entry point.

Invert, always invert. The question is not whether WU will be disrupted, but if you are getting sufficient compensation for bearing this risk at an EBITDA of $923 million and a price-to-earnings ratio of about 6 times. I believe yes, and that it is generous compensation.

Disclosure: Long WU. Long SOL. This article is not investment advice.