Really enjoyed the writeup! One concern I have with Wise is how interest rates could impact the business. In H1 2024, interest income accounted for 58% of revenue growth (rest of business growing at 25% so still quite good) and also led to most of the margin expansion.
Have you made any adjustments in how you value interest income vs transaction based revenue?
I do think the long-term story is great and interest rates don't materially change that BUT could be a reason why this trades 14x free cash versus a higher multiple.
One of the greatest companies I have come across this year. The counterpositioning reminds me of Tesla...the industry watches the company grow und wakes up way too late. And even if they do wake up (like HSBC this year), they are competing with a company that passes through their scale economies consistently. Achieving this growth with 4% marketing spend just shows the product-market fit.
On the interest part of the current income - I mean either I model the DCF with a high discount rate and high interest revenue or with low discount rate and low interest revenue. Both scenarios suggest the stock is undervalued (even if growth slows down significantly).
Really enjoyed the writeup! One concern I have with Wise is how interest rates could impact the business. In H1 2024, interest income accounted for 58% of revenue growth (rest of business growing at 25% so still quite good) and also led to most of the margin expansion.
Have you made any adjustments in how you value interest income vs transaction based revenue?
I do think the long-term story is great and interest rates don't materially change that BUT could be a reason why this trades 14x free cash versus a higher multiple.
Great points
One of the greatest companies I have come across this year. The counterpositioning reminds me of Tesla...the industry watches the company grow und wakes up way too late. And even if they do wake up (like HSBC this year), they are competing with a company that passes through their scale economies consistently. Achieving this growth with 4% marketing spend just shows the product-market fit.
On the interest part of the current income - I mean either I model the DCF with a high discount rate and high interest revenue or with low discount rate and low interest revenue. Both scenarios suggest the stock is undervalued (even if growth slows down significantly).
Good points. Although we would compare to AMZN before TSLA