Wise, the online money transfer and investing platform that was recently listed on the London Stock Exchange posted its second-quarter trading update this morning. The Wise (LON: WISE) share price sliped -2.90 on its second quarter trading update.
It’s the first since it made its stock market debut in early July, with a share price of 800p per share and a valuation of £8.0 billion.
The Wise share price dipped -2.90% to 895p as the company updated the markets about trading in the second quarter of its financial year 2022.
Wise highlighted increasing customer activity and reduced customer costs.
The number of so-called instant transfers made by Wise rose by +8.0% year over year, and at the same time, customer costs fell by -8 basis points or -0.08%.
An additional 4.0 million customers used the service during Q2 2022 growth of around +44% year over year.
The value of transfers, made via Wise, reached £18.00 billion, up +36.0% over the same quarter in 2021 and revenue rose to £132.80 million a jump of +25.0% compared to Q2 2021.
These are good numbers, however, they were in line with the management’s expectations and have been factored into the Wise share price already, making it better to travel than to arrive on this occasion.
Let’s do a Wise share price analysis from both a technical and fundamental standpoint.
Technically the Wise share is looking for support having fallen by -18.00% over the last month from a high of 1176.50p in late September.
Following that sell-off, Wise shares now have an RSI 14 of 33 – just above the oversold boundary.
However, as yet we have seen no upside impetus in either the share price or the relative strength index.
What we can say is that 895p is the 23.60% Fibonacci retracement level, as measured between Wise’s 800p debut price, and the all-time high.
Assuming that level holds, then the obvious near term upside target would be the 38.2% retracement, found just below 942p.
However, should that level fail, then a retest of 800p cant be ruled out.
As this was a maiden trading update from Wise, the fundamentals of the company are still somewhat woolly.
However, if we assume full-year revenues of £520 million (a 20% increase from those seen in FY 2021) on a £9.0 billion market cap, then Wise is trading on a price to sales ratio of just over 17.30 times.
Assuming a 10% profit margin for FY 2022, then Wise shares are trading on a price to book ratio of 25.7 times and a price-earnings ratio of 176 times.
High PE ratios are not uncommon in growth stocks, they anticipate that the business will expand quickly and thus reduce the multiple to earnings, of course, they leave plenty of room for disappointment too.
Analysts that cover the stock have a Wise share price forecast of 962.50p and the consensus stock rating is a hold.
Barclays have an equal weight recommendation whilst Citigroup rates the stock at neutral.
Citigroup has the higher target price for Wise shares at 1030p though that may be reviewed in light of today’s trading update.