Great points @myamislee
This quote from the announcement caught my attention:
"SelfWealth is committed to ongoing product innovation and embedding digital best practise throughout the organisation and the Board recognises the need for new leadership with global expertise in financial services technology in order to continue expanding as Australia’s leading low-cost, online trading platform."
When viewed alongside other statements about short and medium term developments, it is not too difficult to visualise the broad contours of the size and shape of SWF over the next few years.
Growth in active users remains the number metric for me, as the monetisation from all the as-yet-to-be-announced add-on features will be realised over the next five years.
When one starts to realise the structural transformations underway, such as the emergence of a new generation of digitally savvy investors, then the tailwinds make it extremely difficult for a company in this sector not to prosper. This is not to say that some trading platforms won't be much bigger winners than others, but similar to the BNPL sector over the past 3-5 years, during the hypergrowth phase, all companies should benefit from tremendous growth in users. In other words, competition is very healthy during the hypergrowth phase, as new entrants are attracted to the rewards on offer.
The pace of innovation and execution will ultimately determine if SWF can realise it's potential (i.e. a Disallowed from here). To use the BNPL analogy, in 5 years time will SWF be the Afterpay (or even a Zip) of online trading platforms or will it be closer to an Open Pay? My money is on it being more like the former than the latter, which is why the appointment of a new CEO is so encouraging.
On a risk adjusted basis, over the next 3-5 years, I view it as a very low probability of a permanent loss of capital (e.g. 10% chance of current market value shrinking by half), a reasonable probability of doubling in value before the end of this calendar year (e.g. 25%) and a high probability of multibagging by 2026 (e.g. 70%).
No doubt there'll be plenty of volatility along the way, but for the patient investor the potential rewards far outweigh the risks. Put more bluntly, Cath Whitaker will really have to f*ck things up, if we do not get market beating returns over the next 3-5 years!
Given all of the above, SWF remains my highest conviction investment in small caps. Would welcome any contrary analysis.
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