Interest rates don't look like coming down any time soon so...

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optimistus

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13/10/23

13:16

Post #: 70328996
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Originally posted by rheags: ↑

Ultimately it is a win/win for the share price.

Stake have set a short term lower price cap around 16.5/17c you would think while this plays out.

Selfwealth has announced an on-market share buyback, purchase via this mechanism by them is capped at a max price 5% above the trailing 5 trading days volume weighted price so they can slowly push the price up from this 17c mark early next week if they decide.

For stake, they raised the $90m over a 2 year period, last part in 2022. My understanding is they have burnt through most of this and did another capital raise some time early this year, but not sure on that one. Rumor is if it did occur they had to go OS for that raise as they did not get the local support that they had previously had. With last talk of Stake they had $2.8b in equities and $200-250m cash on the books with $20m revenue. My guess is the cash on their platform will have dropped with the interest rate rise and US trading has slowed so the revenue from FX fee is likely to have fallen which is the main source of revenue for them.

I think Stake had hopped that interest rates would stay low, and had planned to have trading run at a loss while competitors, like Selfwealth, ran out of cash since Stake had raised so much money they had deep pockets to be able to sit out multiple years at losses. With the interest rate rise Selfwealth started generating a lot of extra revenue and so does not look like they have any chance of failing in the medium term, so Stake has had to come to the table to try and find some other way of recovering that $90m they raised, and the only way for them to do this is to merge with a competitor. If this goes ahead you can be sure of one thing, Stake brokerage will go up as they are most likely still losing money on every ASX trade, or if making money it would be very small per trade, and they have to start showing some return on that $90m+ they have raised in 3 years.

This could be a make or break move for Stake who appear to have a lot more to gain from this.

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Interest rates don't look like coming down any time soon so with some improved cost control SelfWealth presents a tidy little (nicely profitable) package with a view to a decent revenue stream and no apparent cost pressures on the horizon.

Very much looking forward to Tuesday's presentation and the next quarterly figures.

SWF Price at posting: 17.0¢ Sentiment: Hold Disclosure: Held
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Last 12.0¢		Change -0.005(4.00%)		Mkt cap ! $27.86M

Open	High	Low	Value	Volume
12.0¢	12.0¢	12.0¢	$385	3.206K

Buyers (Bids)

No.	Vol.	Price($)
6	255901	11.5¢

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Price($)	Vol.	No.
12.5¢	100192	2

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No.	Vol.	Price($)
6	255901	0.115
3	39090	0.110
4	98391	0.105
6	331980	0.100
1	23500	0.080

Price($)	Vol.	No.
0.125	100192	2
0.130	64594	3
0.135	14125	5
0.140	485234	11
0.145	212086	5

Last trade - 10.48am 17/09/2024 (20 minute delay)

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