Not always, but oftenly, I tend to invest in businesses I have come across in everyday life, use their services or have used their services in the past and enjoy/ed being a customer.
The SelfWealth platform, in my opinion, is extremely modernised and intuitive to use. The Mobile App was recently updated and I’m liking it thus far. I’m also a huge fan of the flat fee of $9.50 per trade, ability to trade US shares, and CHESS Sponsored model in comparison to the common Custodian model platforms we see popping up.
The SelfWealth platform in some ways reminds me of Strawman, albeit not to the value that Strawman provides in relation to an investment club atmosphere. The ‘Premium Option’ cost (e.g. Seeing members' portfolios under anonymous names much like Strawman) isn't at this point in time worth the fee in my opinion, however with more users, better features, and a greater network effect this could change in future to be more valuable. My hope is that in future the premium option will become more attractive as this will generate consistent cash flow even when trading volume is lower. It will also noticeably improve Average Revenue Per User (ARPU) over time.
If SelfWealth can target Millenials and Gen Z well and highlight their differentiations to attract more users I think their platform has a lot to offer users, and in turn hopefully a lot to give back to shareholders in future. The potential introduction of crypto trading and addition of other international markets being added could attract a lot more of this target market.
Whilst users have been growing quickly, the growth rate in active traders have been slowing and given the reliance on SelfWealth for people to be trading (so they can take a $9.50 clip), this is slightly concerning and will be a metric to keep a close eye on. To be clear, they define ‘active traders’ as “An ‘active trader’ is a portfolio that contains cash or stocks”.
I remember seeing SelfWealth offer a discount on the Premium option not long ago in the form of $240 for the year and includes 15 free trades. From memory (correct me if I'm wrong), this expired on 30 June 21. Considering the slowdown in active users and quarterly trades this seemed interesting/coincidental....
I still see a moderately long road ahead for SelfWealth before we begin to see a reduction in customer acquisition costs and corresponding meaningful returns. That being said, I do believe CAC will be high for some time but marketing etc is also necessary to ensure SelfWealth is able to cement itself within this space, especially in a time where fractional share platforms are gaining a lot of traction.
One thing that gives some comfort, although not a huge amount, is the ‘taking a clip’ on trades so even in the event of some large market downturn if peoples behavioural biases come into action (e.g. Action Bias) SelfWealth will make money both on the way down and on the way up - provided premium members don’t run for the hills and cancel their subscriptions.
I’m interested to see the types of up-selling and cross-selling and potential changes that CEO Cath Whitaker might make in the coming year and how that will position SelfWealth moving forward. I’m also keen to keep an eye on US trades and more specifically, the changes in proportions of US and ASX trades.
The numbers I haven’t yet ascertained but will look to calculate in the near future are Customer Acquisition Costs and Average Revenue Per User. I think keeping track of these two metrics should help guide whether my investment thesis is making or breaking.
Now, metrics aside, down the track (with more employees etc) I’d like to see SelfWealth take a little leaf out of Spaceship Voyagers book when it comes to the articles/blog. Spaceship Voyager does a great job with the consistency of articles and the layout on the app with the articles at the bottom of the dashboard. I know from personal experience I enjoy opening the app and reading an article here and there and keeping up to date with some news. Of course, this does not make sense to be a priority for a long time but down the track could provide a greater user experience.
I also do wonder whether SelfWealth could take a leaf out of Strawmans book with regards to seeing members' portfolios and the value that can be drawn from that other than purely seeing holdings, the weightings, when trades were made etc. As we know from Strawman, a lot of the true value comes from the straws, valuations and forum discussions from members.
Lastly, I'm not sure how this would work but I would like to see SelfWealth work more seamlessly with Sharesight. When linking my CommSec account for example I was amazed how easy and nicely the data came through. However, with SelfWealth, there was a bit more work to be done.
As per the Q4 4C report (I imagine many have read a while ago or seen in other straws, but if you haven't), this is what users can look forward to the following:
“SelfWealth will be targeting high-demand features and products initially. A key area of improvement identified to ensure the platform's longevity and customer retention is the user experience (UX) across the desktop website and mobile. Instant payments will be the first feature to be deployed in Q1 FY22. A beta-test on adding live data to the platform has concluded, with an expected rollout to members Q1 FY22. SelfWealth is currently negotiating with several cryptocurrency exchanges to add a cryptocurrency investment option to the platform's product suite. SelfWealth's strategy is to be the first investment platform to offer CHESS sponsored share trading on the ASX, US trading and cryptocurrency access to Australian investors. SelfWealth is on track to rollout out a new cryptocurrency product in Q2 FY22.”
Disclosure: HELD
