It certainly has been another disappointing day on the market for the Class Ltd (ASX: CL1) share price.
At one stage the self-managed superannuation fund (SMSF) cloud software provider's shares fell over 8% to a 52-week low of $2.40. Its shares have since recovered slightly, but still sit 6.5% lower at $2.45.
This latest decline means its shares have now lost a third of their value since peaking at $3.65 in early October. The catalyst for this was a weaker-than-expected quarterly update last month.
Is it time to invest?
Whilst its shares are not conventionally cheap, at 36x trailing earnings I do think they are beginning to look reasonably good value given its current growth profile.
For the quarter ending September 30, the company saw its Class Super accounts increase to 146,922, meaning the company now has a market share of 25% of the estimated 598,000 SMSFs.
The company has been able to do grow its market share strongly over the last few years due largely to the quality of its product. Testament to its quality is its retention rate of 99.4%.
With lots of happy customers, it will come as no surprise that the company is attempting to leverage this through cross-selling other products. So far it has been a success, with management reporting a 12% lift in Class Portfolio accounts during the last quarter.
Pleasingly, approximately 28% of Class Super customers are now using Class Portfolio.
Where next for its shares?
Class isn't due to update the market on its performance again until January of next year. The lack of a positive catalyst to drive its shares higher in the short-term could mean they continue to trade lower for longer unfortunately.
So while I do see value in its shares today, there may be better buying opportunities further down the line. In light of this, I would suggest investors hold off an investment for the time being until sentiment shifts positively.
Until then, fellow fintech shares XERO FPO NZX (ASX: XRO) and Afterpay Touch Group Ltd (ASX: APT) may be better options.
