Wise the online currency transfer app and investing platform published a trading update this week.
What information did the trading update contain?
The trading update was for the third quarter in financial year 2022 during which time the business reached several significant milestones, including 4.0 million customers completing cross border transfers, in a single quarter for the first time in Wise’s history.
The firm moved more than £20.00 billion for customers in the quarter and that represented growth of +38% year over year and +15.0% over the prior quarter.
Wise reiterated that it was speeding up transactim times and reducing costs for its customers, and noted that 45% of transfers made in Q3 were completed instantly, and that it continues to expand access to its products across the globe, through the use of partnership arrangements.
Wise services are now available in Canada, Malaysia and Brazil, and to business users in China through a partnership with Alipay.
Year over year customer costs fell by -9 basis points, or 9 one-hundreths of a percent and Wise has lowered its charges in 50 currencies over the last 12 months.
That’s great news for customers but will it translate into good news for shareholders?
The shares opened higher on Wednesday at 672.80p and printed up to 714p, however, the stock could not maintain that upward momentum and closed at 689p.
Even those gains proved to be fleeting and Wise sold off in Thursdays session, at one point touching a low of 658.3p.
One thing that was notable over both trading days was the relatively low volumes of shares traded, and the fact that most trades in the stock were low value, both of which suggest that institutions are staying on the sidelines.
What does the market think?
We could find no fresh broker comment on Wise after the trading update, though readers may recall that US investment bank Citi downgraded the stock 10 days ago, saying that valuations and expectations for the group were excessive, and that the 20% compound annual growth numbers required to justify the share price didnt look attainable.
Wise doesn’t seem to have a problem adding volume and increasing turnover, but a question mark remains as to whether that can be turned into a postive earnings per share number in the not to distant future.