Wise plc (WISE.L)

I'm no expert, but I reckon the decline could be down to several factors alongside the trading update today.

1. The share is already tremendously overpriced to begin with, based on its inflated 400+ P/E ratio. The updated figures today don't show tremendous growth (Although 25% is still pretty decent) to justify its share price moving forward.

2. The earnings call was rather uneventful, as they refused to disclose gross margins (As expected). This will come on the 30th of November 2021. I reckon we'll all be looking forward to this date instead.

3. Although growth in revenue was at 25%, the growth rate itself has taken a hit from what it was in previous years and quarters. Obviously this is all compound, but sometimes people forget.

4. There was a lack of/no mention with regards to their plans to expand outside of their core regions towards South America and Africa, where there is huge potential in those emerging markets.

5. Their take rate has taken a slight hit, meaning they retain less profit than in previous quarters. I'm guessing investors are worried that this may affect their margins come the earnings release.

Would be happy to hear more insight to this!

Hello folks. Just a few thoughts on reading the comments below.
There is no lockup expiry - remember WISE was not a traditional IPO. They were already turning a profit and went public to allow existing shareholders (staff) to offload their shares (cash in). So it's not that.
Occam's razor would suggest, unfortunately, that there is perhaps a selective news leek in advance of upcoming earnings announcements, i.e. some bad news re growth rate etc. We will have to wait and see.
Remember too that the float size is small, so even a modest offload from a single large investor would have a significant impact on price.
Failing all that, this is a good buying opportunity. One of the things I like about Wise is that it is not like 'other fintech companies' in this space, i.e. simply adding 'products' left right and centre, e.g. Revolut. It remains focused on what it does best - and there is loads of market share to capture in this respect. I am exposed to a number of countries that have never even heard of them.
Finally, also, on a relative value basis, they are a lot 'cheaper' that Revolut in terms of market cap.
Keep the faith,
Tom

The cross border payments improvements from banks could be the reason, so nice catch ntonal, thank you and others.

I maybe wrong in this, but this intention, project is happening from 2020 or even long before, banks have high burocracy, obviously they have the intention, and profit in fixing the problem and get back the market share, but will this happen in the next 1-2-3-4 years? If it will, will it be cheaper and faster and more transparent than Wise? But yes I agree in the future Wise should be a spawner, meaning they should spawn other products like they did with Assets, they could do a bunch of other things, like insurance, renting, travel, anything just slightly related to their mission.

I still think even if the cause of the selloff this news it is too harsh and too much overreaction to drop 15-20% just because of a proof of concept version of something (better or worse) cross-border payments, just my two cents.

Is there any news/ reason other than:
1. Interest rates rising
2. and the wise CEO's tax issue

It seems odd that both of these factors would cause wise to drop so much over a 2 day period.

- Maybe early investors are selling out but that would not cause such an extreme drop

I can not find any other news. I believe the company does have strong fundamentals for the future and so I see a potential buying opportunity.

That being said I am concerned with the tax issues the CEO of WISE has come under fire for.

this might be a good reason
Banks from both sides of the Atlantic have successfully exchanged real-time cross-border payment messages as part of a proof-of-concept trial conducted with Swift, EBA Clearing and The Clearing House.

The PoC was performed as part of a new initiative, dubbed Immediate Cross-Border Payments (IXB), that demonstrates the ability to synchronise settlement in one domestic instant payment system with settlement in the other and convert real-time messages between both systems.

Eleven global banks contributed to the design, with seven banks - Bank of America, BBVA Group, Citi, HSBC, Intesa Sanpaolo Bank, J.P. Morgan and PNC Bank - participating in the proof of concept, where the banks successfully exchanged payment and confirmation of receipt messages.

The platform conforms to the Financial Stability Board's October 2020 roadmap for boosting cross-border payments, which have traditionally been slow, expensive and unreliable.

“By leveraging the RTP network in the United States and (EBA Clearing's) RT1 in Europe, along with ISO 200022 message formats, IXB demonstrates that a faster cross-border payments capability is possible and can be delivered using existing technology,” says Russ Waterhouse, EVP for product development and Strategy at The Clearing House. “By utilising existing faster payments systems, financial institutions can leverage existing processes, protocols and technology to make the user experience seamless across payment types, whether domestic or cross border.”

Having proved the concept, EBA Clearing, Swift and TCH plan to begin work on developing a working model that can be replicated across other currency corridors and payment systems.

Similar initiatives are already underway in other jurisdictions, with Singapore beginning a phased linkage of its PayNow plumbing with Malaysia’s DuitNow real-time payment systems and India's Unified Payment Interface, building on a bilateral tie-up that was first implemented with Thailand's PromptPay in April 2020.