SelfWealth Record Growth Fails to Stop Share Price Pressure (ASX:SWF)

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Trading platform SelfWealth Ltd [ASX:SWF] is under the pump today. The share price is currently down 4.11% at time of writing, even though management just announced a record-breaking result.

It seems that investors are either cashing out or were expecting more from the company’s FY21 performance. Perhaps a testament to the volatile market we’re in currently.

So let’s take a closer look at what has happened and why…

Record growth fails to impress

With the release of their FY21 results, SelfWealth’s key metrics look fantastic on paper.

Revenue is up 135% year-on-year to $18.4 million. A new record that has been lifted by a 105% increase in active traders on the platform.

So they’re clearly winning over more users and making more from them via brokerage fees.

On top of that, their gross profit margin has improved from 33.4% to 41.4% over FY21. Meaning they’re extracting more value out of every dollar they make as the business scales.

Plus, with a recent capital raise behind them, SelfWealth should have the necessary funds to continue growing. Investing in new technology and product developments to maintain their recent momentum.

Despite this, though, investors are bidding down the stock today.

A sign that perhaps some are cashing out. But given the stock’s 49.28% decline in price over the past six months, that seems unlikely.

Rather, I suspect that investors and perhaps the wider market were expecting more growth. A need for even bigger revenue increases and user acquisition. Something that management is clearly aware of themselves, as they note on their future plans:

Our future product innovation will be guided by our detailed Product Roadmap, which has been developed based on comprehensive customer surveys and in-depth market research. In Q1 FY22, we will launch live pricing, instant deposits and a desktop US refresh.

In Q2 FY22, we will enter new global markets and improve tax reporting. In addition, SelfWealth plans to implement cryptocurrency trading in FY22, subject to gaining Board and appropriate regulatory approvals. This exciting development will be an Australian first.

So if they can deliver on these plans, then perhaps this time next year we can report a much different story. Particularly with the potential for this tiny platform to take advantage of the cryptocurrency trend.

For now, though, investors just have to wait and see what comes next.

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Where to from here for the SelfWealth Share Price?

Looking ahead, it is clear that the Product Roadmap will be vital to regain investor confidence. Something that may be able to revitalise interest in this struggling stock.

Indeed, more than anything, SelfWealth just needs some positive momentum — or at least more of it.

As for how and when this momentum may manifest, only time will tell. But investors will certainly want to think carefully about potentially leaving this sinking stock or holding out for a brighter future.

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A list that is brimming with the very essence of what makes small-caps unique: high-risk and high-reward opportunities. So if that sounds like something up your investment alley, check out the full report for yourself, right here.


Ryan Clarkson-Ledward,
For Money Morning

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About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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