Figure Technology Solutions, Inc. (FGRS) stock intrinsic value fair value estimate & owner earnings analysis

Figure Technology Solutions runs a loan-origination and loan-trading platform built on its own Provenance blockchain. Its core is the home equity line of credit (HELOC): partner lenders such as credit unions, banks and mortgage originators use Figure's origination software to close HELOCs under their own brands (Partner-branded volume of $6.4 billion in 2025), Figure also lends under its own name ($2.0 billion), and the resulting loans are sold to investors, increasingly through the Figure Connect marketplace ($3.8 billion of 2025 volume, up from almost nothing in 2024), or pooled into securitizations. Figure earns technology and ecosystem fees ($120.8 million in 2025, up from $28.3 million), gains on loan sales ($180.0 million), origination fees ($72.5 million), servicing fees on a $12.9 billion serviced book ($31.5 million) and interest income ($74.8 million). Smaller lines include a digital asset exchange and, since February 2026, a blockchain-native share class traded on its own ATS. Total 2025 revenue was $506.9 million, up from $340.9 million in 2024 and $209.5 million in 2023. Owner earnings. Because Figure originates loans to sell them, the billions of dollars of loans it originates, acquires and sells each year run through operating cash flow. We treat the change in loans held for sale (net of the gain booked on selling them) as working capital, count warrants issued for services as share-based pay, and count losses on loans Figure must repurchase as a real cost. On that basis owner earnings were about -$67.6 million in 2023, $1.9 million in 2024 and $94.3 million in 2025 (-$1.32, $0.03 and $0.66 per diluted share; the 2025 share count is depressed by the September 2025 IPO, and the fully diluted count is now about 247 million). Share-based pay is large and rising: $62.4 million in 2025 and $52.0 million in just the first half of 2026, and we charge it in full. Figure has had exactly one profitable year on our measure, so the earnings level is the least certain part of this valuation. Business value before lenders. Adding back the cash interest Figure pays (about $50 million in 2025, mostly on short-term warehouse lines that carry loans for under a month before sale) gives roughly $144 million of 2025 cash flow before lenders. The first half of 2026 supports that level holding: net income was $132.4 million against $29.1 million a year earlier and revenue $392.6 million against $190.6 million, so we start the base case at $170 million in 2026 rather than below the 2025 figure. We do not credit further growth: Figure Connect's 2025 surge, new products and partner wins are recent and unproven through a downturn, so none of them is in the bag. Base case: about $150 million a year of pre-interest cash flow after 2026, with one ordinary housing and rate slowdown in years four and five that cuts it to about $60 million, then recovery. After year ten the partner network and serviced book fade over a further decade; the technology lead is real (Figure's per-loan cost and funding speed are far below industry norms) but we have no long record showing it survives competitors copying it. Business value about $1.29 billion. Net of debt, Figure holds roughly $750 million of surplus cash: $1.44 billion of cash at June 30, 2026, less about $400 million owed to third-party loan owners, less a working cushion, with the $963 million of warehouse, retained-interest and other debt roughly covered by $597 million of loans held for sale and $356 million of retained securitization interests. Business $1.29 billion plus $0.75 billion net cash = about $8.26 per share. Bear case: a replay of the 2008-2010 home equity collapse, when HELOC origination and the private-label securitization market shut for several years. Figure's earnings come almost entirely from origination and sale volume and its top 10 partners supplied 56% of 2025 volume, so we assume two good years, then three years of losses (-$80 million, -$80 million, -$50 million) while fixed costs and share-based pay continue, a $150 million write-down of the retained first-loss securitization interests Figure holds, and a slow return to about $60 million a year, fading over five years after year ten. Business value is only about $125 million; with the net cash the shares are worth about $3.54, of which roughly $3.04 is cash. The warehouse lines (several maturing between 2026 and 2027, with tangible net worth, liquidity and leverage covenants) would shrink with volume rather than need refinancing, and Figure's cash comfortably covers them, so the bear case is a story of lost earnings, not insolvency. Bull case: the 2025 Figure Connect and partner-branded gains hold and the first-half 2026 pace continues to about $250 million a year of pre-interest cash flow, with one shallow slowdown, fading over fifteen years after year ten. Business value about $2.43 billion plus net cash gives about $12.87 per share. Our previous estimate was built on a different basis and is not comparable. The main business facts that moved our numbers are that 2025 profitability, once loan-sale gains are treated as earned only when cash is realized and share-based pay and repurchase losses are charged, is lower than reported net income, which also benefited from a one-time $26.0 million deferred tax benefit; and that we no longer credit years of rapid growth that has not yet been proven. Margin-of-safety price. We are not confident in the earnings level: one profitable year, a business model whose volume depends on home equity borrowing and interest rates, and heavy, rising share-based pay. The worst plausible event is a credit or housing shock that closes the loan-sale and securitization markets for years while Figure holds first-loss retained interests; the structure would survive it because the debt is short, secured by loans that are sold within weeks, and dwarfed by cash, but earnings could vanish for several years. If we are wrong about the durability of 2025-2026 volume, wrong about competitors replicating Figure's cost advantage, and wrong about share-based pay staying below 15% of revenue, the shares are worth little more than their cash, about $3 to $3.50. Figure pays no dividend, so the whole return must come from value being recognised, and the price assumes a holding period of about three years. At $4.00 the price is only modestly above the net cash for a business that, on its demonstrated 2025-2026 run rate, earns something like $0.60 per share before lenders; if the base case plays out, it implies roughly a doubling in three years, and in the bear case the cash supports most of that price. That is why the margin-of-safety price is $4.00.