Why has the Selfwealth (ASX:SWF) share price dumped 18% in a month?

Selfwealth shares are falling, despite the continuing growth of the business.

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A smartly-dressed businesswoman walks outside while making a trade on her mobile phone.

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The Selfwealth Ltd (ASX: SWF) share price has dropped by 18% in the last month.

That’s despite the share brokerage company continuing to grow at a very quick pace.

Both FY21 and the first quarter of FY22 showed a high level of growth.

FY21 report

Whilst the FY21 result wasn’t within the last month, it may have featured in investors’ minds in recent months.

The last financial year saw revenue growth of 135% to $18.4 million, with a 105% increase in active traders. Operating cashflow was a positive $1.1 million in FY21, driven by “strong” revenue growth and disciplined cost control.

Selfwealth has been working on diversifying its revenue streams. US trading was launched in December 2020 and was adopted by 29% of total active traders within the first six months.

The company said it demonstrated its scalable business model in FY21, with increasing profitability. The gross profit margin increased from 33.4% in FY20 to 41.4% in FY21. Operating expenses increased by 41% compared to revenue growth of 135%.

Selfwealth’s mission is to increase its market share to be the number two in online trading. It said it was number four at the time. The company said it is the top platform for attracting people switching from banks and other platforms.

The Selfwealth share price has fallen by around 17.5% since the release of the FY21 result.

FY22 first quarter update

Just over a month ago, the business reported the first quarter of its FY22.

It has reported accelerating quarter on quarter growth. Active traders increased 13% to 107,461, quarterly trade volume grew 22% to 435,620 and client cash rose 15% to $600 million. The operating revenue rose by 7.8% quarter on quarter to $5.5 million and 32% year on year.

Selfwealth has been working on increasing engagement through content, with new development and investment webinars attended by thousands of customers every week.

It has also been working on adding value with production innovations like instant deposits, live pricing and integration of ESG data.

After a capital raising a few months ago, the business has been increasing its investment and it’s seeing the advantages of that, with expectations the company will keeping benefiting for the rest of the year and beyond.

Selfwealth experienced a cash outflow of $1.1 million for the quarter to 30 September 2021. It ended the quarter with $17.5 million of cash with no debt.


The latest market sensitive announcement that may have impacted the Selfwealth share price was the annual general meeting (AGM).

At the AGM, it outlined the business case for Selfwealth, its FY21 result and the FY22 first quarter numbers.

The company is also on track in the second quarter of FY22 for cryptocurrency and new international markets. It’s also looking to refresh its user interface and add more education and content for members.

In the third quarter it’s looking to launch ‘dynamic notifications’, tax reporting, provide a advisor platform update, community insights and the news feed 1.0.

Then, in the fourth quarter of FY22, it’s working on new products, news feed 2.0 and the dynamic trading feature.

Selfwealth says that it has high growth potential on a scalable platform with diversified revenue and significant operating leverage.

Selfwealth share price snapshot

Whilst Selfwealth shares may be down more than 50% over the last nine months, it has risen more than 70% over two years and 210% from the bottom of the COVID-19 crash.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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