Raiz with a market cap of $130 million and a share price of $1.30 continues to add to their existing user base and funds at a fast rate. So we take a look and see if Raiz Stock is a buy for us, and answer Should I Buy Raiz Stock?
Raiz Shares Price
Shares in ASX:RZI have fallen 40% since their 52-week high of $2.20 back in February to land at $1.30 at the time of writing, giving them a market cap of $130 million. Raiz provided a key metrics update to the market back in May 2021, showing a massive 97% increase in active customers. Potentially, this is part of the reason for the uplift in the company’s share price.
Should I Buy Raiz Shares: About
Raiz Invest Limited (ASX: RZI) is Australia’s largest, mobile-first financial services platform designed to boost investment and savings in and outside of superannuation, available via the Raiz app or its website.
Since launching in 2016 Raiz has achieved solid growth, amassing more than 1.75 million downloads, over 1,705,000 signups, with over 437,000 active monthly customers and over $762 million funds under management as of 31st of May 2021.
Raiz is also expecting to launch a home loan product shortly, however, details on this are scarce at the current time.
To sign up with RAIZ see below promo code which will give you $5 to start investing with: https://app.raizinvest.com.au/invite/JK89KR
Should I Buy Raiz Shares: Funds Under Management Vs Share Price
Raiz as of their last update to the market in July 2021, provided an insight into their operation with once again another month of steller progress. The company announced that they have increased Total Funds Under Management to $762.02m. This is up 3.3% MoM, 14.6% QoQ or 76.2% YoY. We are seeing truly massive growth from Raiz by any metrics. The companies efforts in South East Asia also seem to be performing quite well growing at an increased rate of >7% MoM for sign-ups and openings of investment accounts.
Typically investment funds are valued on a function of their FUM (Funds Under Management), so we have put the share price against the total funds under management to provide an insight into their progress.
As you can see from the above, the Total FUM is approaching $760.2 million vs the share price which seems to have deviated slightly from the FUM vs the historical gap here. In our opinion, this may present a decent buying opportunity here for RZI.
Should I Buy RAIZ Shares, Acorns Planning to List on the NASDAQ.
In the May 2021 update, RAIZ also provided some interesting news related to their previous involvement with Acorns. Raiz and Acorns have been separate entities since 2018, however, Acorns still holds a significant stake in ASX listed Raiz. From the announcement:
“The other interesting news was the recent announcement that the US group Acorns Grow Inc (Acorns) is planning to list on Nasdaq. Acorns is a micro-investing success story that brings our savings and investment model to the fore, not only in the US but globally. Raiz split from Acorns in 2018, pays no ongoing license fee for the technology that was provided by Acorns, and Acorns is still the second-largest shareholder in Raiz.”
Acorns are looking to go public with a valuation of US$2.2billion via a SPAC merger under the ticker code OAKS. This may signal the bullish sentiment for micro-investing apps and may re-rate RAIZ share price in line with OAKS. However US-listed stocks almost always fetch a higher multiple. It’s also worth remembering that Acorns has over 4million subscribers and significantly more FUM than ASX listed RAIZ at ~US$4.7billion.
Raiz management has been able to continue to increase revenues YoY since 2018, we see no reason why they will not continue to increase revenue this year, especially given the series of positive updates that have been provided by the company in regards to increasing users and FUM. (Keep in mind that TTM includes the 4Q of FY2020 as compared to updated data for FY21)
|52 Week Range||0.60 – 2.20|
|PE Ratio (TTM)||N/A|
RZI Income Statement
This is the income statement from the previous full year. Here we see excellent revenue growth to $5.2M, which has translated to a loss for the period of $2.9 million, and an EPS of 0.03cps. This is somewhat expected for a product currently trying to capture market share. Marketing costs have also significantly increased during the period, however, this was flagged previously by the company.
ASX:RZI Balance Sheet
The balance sheet from HY2021 as at 31 December 2020 has been included below. Raiz has $11million cash and cash equivalents on hand which is just under 8% of their market capitalization. Raiz also has net assets of $28.9million which is 22% of their market cap. This is a good sign for investors as we can see each share will have an NTA backing of $0.12 per share.
Raiz also carries a very small amount of debt on the balance sheet, which we are currently not concerned about.
ASX:RZI Insider Ownership And Trading
We can see that RZI is largely owned by the General Public at 54%, with institutions and individual insiders holding the remaining significant stake. Private companies also hold 15.7% of the float.
The individual insider position is significant for a company of this size and nature and management have significant skin in the game, which we like to see.
The top 5 shareholders in RAIZ Shares have been included below:
|6.33%||Acorns Grow Incorporated||5,186,309||A$8.2m|
|4.69%||SG Hiscock & Company Ltd.||3,842,865||A$6.1m|
|4.33%||Salter Brothers Asset Management Pty Ltd||3,549,570||A$5.6m|
From the above it’s great to see CEO George Lucus holding a significant position in the company, you can also see soon to be listed NASDAQ Acorns Grow Incorporated holds a significant portion of shares.
Should I Buy RAIZ: Prophet’s Take
RZI shares have performed quite well over the past year with shares up nearly 150% YoY. Given the companies last set of performance figures, we see no sign of a slowdown in uptake of investors entering the platform and no reason why FUM will not continue to increase. The southeast Asian projects are also in their infancy and this is a massively growing market for investors.
We are closely monitoring Raiz’s Share price and are considering buying some shares. We like what management has done and believe there may be a share price re-rate off the back of Acorns SPAC entry into the NASDAQ. The company is increasing revenue YoY and FUM continues to increase at a decent rate.
Over the long term, we are BULLISH, but we want to get in at a decent entry price.
Please Remember all Articles Published on Prophet Invest are Opinion only
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