HUB24 Ltd (ASX: HUB) has been a top ASX performer, with its share price up an extraordinary 286% over the past five years.
That kind of run is enviable, but the valuation inevitably raises eyebrows as the stock now trades at around 100x trailing earnings. So why are investors still willing to pay up?
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Growth at scale (and still accelerating)
The most obvious reason is growth, which continues to surprise to the upside.
HUB24's latest quarterly update shows that it is scaling rapidly across its platform and technology businesses, with its platform funds under administration increasing 29% from a year ago.
Importantly, this growth is occurring at a meaningful scale with platform funds under administration now exceeding $127 billion.
This sort of growth at scale for a tech platform can lead to strong profitability, and investors are willing to pay for that growth.
While the headline multiple looks extreme, on a one-year forward basis, the valuation falls to roughly 68x earnings. That's still expensive, but it reflects expectations that earnings will continue to compound strongly rather than plateau.
Structural industry tailwinds
HUB24 also benefits from powerful industry tailwinds.
Australia's wealth industry is undergoing long-term structural change: advisers are consolidating platforms, regulatory complexity is rising, and technology is becoming essential to productivity. The shift toward fewer, higher-quality platforms favours established players with scale and deep integrations.
HUB24 has positioned itself as a premium, adviser-aligned platform at exactly the right time. It's a powerful narrative for investors who don't want to swim against the tide and would rather have their investments powered by strong industry tailwinds.
High margins and operating leverage
Another key part of the valuation story is profit margins.
According to HUB24's strategy deck released in late November 2025, group revenue has grown at a 4-year CAGR of 38%, while underlying EBITDA has grown at 46% and underlying net profit after tax at 61% over the same period. That gap highlights the business' operating leverage.
As revenue scales, a growing share of it drops through to profit. Platform EBITDA margins have also expanded steadily, supported by recurring revenue and a cost base that doesn't rise linearly with funds under administration.
With roughly $400m of revenue and almost $100m of underlying net profit, profit margins are high, and this combination of strong growth and expanding margins is exactly what supports premium valuation multiples.
An emerging oligopoly
Finally, investors increasingly view HUB24 as part of a small group of long-term winners, alongside peers like Netwealth Group Ltd (ASX: NWL).
Platform businesses tend to become oligopolistic over time. Scale attracts advisers, advisers attract flows, and flows justify further investment in technology, thereby reinforcing the competitive moat. Once established, these advantages can be difficult for smaller competitors to overcome until the next big shift occurs.
The risks of paying up
For all of HUB24's desirable traits, none of them completely insulates the risks for investors.
A 100x earnings multiple leaves little room for disappointment, and sharp drawdowns are to be expected, particularly during market volatility or if growth slows. Even great businesses can see their share prices fall when expectations reset.
Foolish bottom line
HUB24's valuation reflects more than just hype. Investors are paying for growth at scale, structural tailwinds, high margins, and a belief that the company is helping shape a concentrated platform market.
That doesn't make the shares low-risk, but it does help explain why, even after a 286% rise in five years, the market is still willing to pay a premium.
