Shares in fintech firm Wise have plummeted today after a note from investment bank Liberum told investors to dump the stock over mounting competition fears.
Wise, known for its rapid cross-border money transfer service, has enjoyed in boom in profits this year as record numbers of customers poured onto its platform in the past quarter.
But Liberum analysts have today downgraded the firm and told investors it will suffer from new players muscling their way into the sector and increasing competition as it grows its banking offer.
“As Wise expands from its core international transfer business into international banking while extending its product and services offering, the competition it faces increases,” the analysts said.
“The expanding competitor set includes other money transfer businesses (Western Union, Moneygram, Remitly, Xoom, Equals etc) as well as neo banks (e.g. Bunq), super apps (e.g. Revolut), expense management start-ups (e.g. Pleo) and incumbent banks.”
Wise was a “great business”, the analysts said, but there was a risk the “disruptor gets disrupted”.
Shares in the firm fell sharply after the note was published, tumbling more than four per cent between 11:45 and 13:20.
It comes after a turbulent few months for the London-based fintech in which bumper profits have been overshadowed by a probe from the FCA into the firm’s chief Kristo Kaarmann over a 2017 tax dodging scandal.
Kaarmann, who founded the firm and still has a stake of around 18 per cent, is currently under investigation from the watchdog to deem whether he is a ‘fit and proper’ person to be running the company.
Wise was contacted for comment.