Key insights
- Wise's shift to NASDAQ (WSE) and its 'Scale Economies Shared' model are highlighted as potentially disruptive to traditional cross-border banking. The company's low take rate and high ROIC are noted. While competition exists, the model is seen as a protective feature. The article suggests potential undervaluation, but the overall impact on US equities is limited.
On May 11 Wise PLC changed it primarily listing from the LSE to the NASDAQ - it now trades under WSE.
Wise is a remarkably durable, capital-light software engine trapped inside a capital-heavy regulatory wrapper. They are successfully weaponizing price to suffocate legacy banks via Scale Economies Shared (counter- positioning is the moat).
It is a phenomenal business, and at $12.75 USD it may be undervalued.
Wise operates on the "Scale Economies Shared" flywheel (the same concept Nick Sleep identified in Costco).
Instead of hoarding margin expansion as volume scales, management intentionally slashes its take rate (which dropped to a record low of 0.53% in Q4 FY25).
Isolating it's core operating business it has a ~75% ROIC, and looking at the whole entity it has a ~30% ROE.
The TAM is massive and the market is overall under-penetrated.
There is lots of competition, although Wise's Scale Economy Shared model is a protective feature.
Deep Dive write up with valuation models here - https://thepursuitofcompounding.substack.com/p/wise-the-real-time-dismantling-of?r=xy3ae