FRGE

We rate Forge Global Holdings, Inc. (FRGE) as a Reduce with a composite score of 47.4/100 at a current price of $44.58. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in momentum (87th percentile) and stability (42th percentile), which together account for the majority of the composite score. Offsetting weakness in value (8th percentile) and investment (29th percentile) tempers our overall conviction. We assign a No Moat rating (28/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; the path to profitability; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Forge Global Holdings, Inc. holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 47.4/100 places it at rank #2419 in our full 7,333-stock universe. At $230M in market capitalization, Forge Global Holdings, Inc. is a small-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (87th percentile), revenue contraction of -5% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 99% (+22.7pp vs sector) narrow to operating margins of -79% (-96.2pp vs sector) and net margins of -73.1%, yielding a gross-to-net conversion rate of -74%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $44.58, Forge Global Holdings, Inc. is trading at a premium to fundamental value. Our value factor score of 8/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at P/B of 3.0x, P/S of 6.6x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to Forge Global Holdings, Inc.. The stock presents a balanced risk profile: current negative profitability (net margin -73.1%) and low beta of -0.99 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: current negative profitability (net margin -73.1%); low beta of -0.99 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 42th percentile and quality factor at the 37th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 99% provide a buffer against cost pressures; conservative leverage (22% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Forge Global Holdings, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-31.8%), negative profitability, weak asset returns (ROA -26.1%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Forge Global Holdings, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Forge Global Holdings, Inc. receives a Reduce rating with a composite score of 47.4/100 (rank #2419 of 7,333). Our quantitative framework assigns a No Moat (28/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 41/100.

Our analysis does not support a constructive view on Forge Global Holdings, Inc. at this time. The combination of limited competitive advantages, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.