With a low-cost business model, I think we can gain a large share of the global remittance market. By returning efficiency to your customers in a low-cost manner, you only need to strengthen your competitive advantage over your peers.
And this seems to be happening.
Gain market share
According to the results for 6 months By the end of September, 3.9 million consumers had used the platform to send a total of £ 34 billion, up 44% year-on-year.
Individual and corporate customer numbers increased 39% and 61% to £ 25.9bn and £ 8.5bn, respectively. Interest, taxes, depreciation and adjusted earnings before interest (EBITDA) increased 20% year-on-year to £ 60.6 million. Pre-tax profit fell 6% as the company’s IPO-related costs negatively impacted its bottom line.
Wise profit margins are also under pressure. Group’sTake the tax rate “ During the period (percentage of money received in each transaction) decreased from 0.81% in the previous year to 0.75%.
This is primarily due to the Group’s decision to reward customers at lower cost as the business grows. Some investors and analysts may argue that this approach is counterintuitive. If a company is growing, other investors may ask why they need to sacrifice profit margins to reward their clients.
I think it’s missing a point. The international money transfer market is very competitive and the wise needs to stand out. This can be achieved by keeping costs as low as possible and returning efficiency gains to consumers at lower prices.
Wise stock outlook
This strategy seems to work. So, despite recent performance, I believe stock prices remain undervalued. Wise remains a small part of the global remittance market and has great growth potential over the next few years. Already profitable, businesses have the money they need to reinvest in to drive growth and reach more consumers.
Still, as mentioned earlier, the global remittance market is extremely competitive. Wise’s peers will be looking for ways to gain an edge over this startup. They can attack it at a lower cost or use their size to attract consumers with a better marketing program.
Companies always face these challenges. Keep an eye out for these headwinds as you move forward.
Nevertheless, I think Wise should continue to prosper as the growth of the world economy recovers after the pandemic. I think profits will continue to grow as we gain market share. This should promote a virtuous cycle, reduce consumer costs and increase transaction volumes.
I think the company’s growth story has just begun. That’s why I keep buying stocks.
Rupert Hargreaves does not have a position in any of the shares mentioned. The Motley Fool UK does not have a position in any of the shares mentioned. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, given the various insights, A better investor than us.
I was right about Wise stocks.This is what i do now
https://www.fool.co.uk/2021/12/04/i-was-right-about-wise-shares-heres-what-id-do-now/ I was right about Wise stocks.This is what i do now