Yes. Interesting to look at those people here saying negative things and having registered two days ago. Comments mainly about a certain CFD boiler room being good and FT being bad.
Brace for all the shilling posts around the crowdfunding.
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Did @Viktor add any further insight into when the next Freetrade investment round may occur?
Trade Republic just raised Ā£54 million with a similar number of customers to Freetrade. That must have been at a sky high valuation. Could be over Ā£250 million next round for Freetrade.
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Is Trade Republic operational yetā¦i.e. real trading clients?
Yes apparently they have 150k clients across Germany and Austria.
One interesting thing I noticed is that they let you download the app in markets where they arenāt open for business yet. Thatās unlike Freetrade, which isnāt available in the French or German app stores for instance.
Maybe Trade Republic uses downloads in foreign countries to gauge interest. Although in my opinion they couldāve done better by trying to capture email adresses as well.
Many thanks for that. I am also of the opinion that FT could be spread further easily but I am also aware of managements need to do it right with less speed and more haste!
Googled it. Donāt speak Deutsche but this sounds so awesome, whatever that means:
DER BROKER FĆR EINE NEUE GENERATION
GĆ¼nstigster Online Broker? Aktien kaufen fĆ¼r 1 Euro!
Robinhood waited for way too long despite all the funding they received. Itās going to be tougher now. Money never sleeps. But their founders are rich anyway.
If this was the case, Santander and NatWest would still be offering you a 2008 website for your online banking. When companies snooze, they lose market share - no matter how big it is - because others are moving faster (with off-the shelf APIs to build things faster).
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Well its a new generation tech so I think some testing/learning is needed. My view is that if the Irish/Netherlands addition goes well, then Germany/France can happen fast and then there should be a proven methodology to unleash it all over the place. Heres hopingā¦
honestly if Robinhoodās current traction and valuation are any indication, this market is huge. So huge in fact that competition wonāt be a problem in the short term. Not all tech markets are monopolies and I think the retail stockbroking market is a close cousin of the consumer banking market.
The way it played out in the consumer banking space was that several startups managed to gain significant user bases. Look at N26, Monzo, Revolut, Chime, Monese, Starlingā¦ All these players are quite successful. Sure some are doing better than others, but itās fair to say all of them are somewhat successful.
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They have to justify their valuation and RH have been promising to expand overseas since before I heard of FT. First it was Australia - and now you have Stake (not a RH company).
Opening an office - assuming itās for legal and regulatory reasons - and acquiring users is hard (@Viktor would probably concur), when people stick to their FT, T212, ETrade and BarclaysStockbrokers accounts, because they do the job for them just fine. (Iāve tried convincing people to switch myself.)
AJBell, Schwab, etc are all fintechs who havenāt neglected spending on infrastructure nearly as much as major banks have. And since retail banking is a necessity, unlike stock trading, one can argue that it would easier for Revolut and N26 to pick up new users, when some (younger) people wouldnāt think about stepping foot into a bank branch, but need a debit card. I can recall Revolut talking about the HSBCs as their competitors - despite being slow, they have deep pockets and donāt need to raise VC money.
Donāt forget, Square with Cash App are already in the UK. Theyāre well funded and are targeting Gen Z. Great fintech they are (B2B, B2C).
But the market share is indeed huge and is growing. I reckon wealth management - which is more of a necessity for most people, compred with pure stock trading - is where the opportunity lies. Managing money for the long-term is a necessity (not a āluxuryā, in economic terms) and can passively bring in fees on a recurring basis. And thatās probably why FT and the rest are after your ISAs and can offer Nutmeg-style offerings (think Wealthfront in the US).
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Couldnāt agree more with this statement. Whatās even better is that the neo brokers like freetrade are tapping in to a new market with millennials and etc. I know so many ppl that had no interest in investing but saw Freetrade and felt that investing seemed cool and easy. I think thatās a strong advantage the neo brokers have over the neo banks. This market is going to be huge and even bigger in the coming years. Exciting times for Freetrade in particular as they are the only neo broker with traction that seems to crowdraise, this enables Freetrade to acquire loyal users for virtually nothing that will tell friends and family, this marketing strategy is geniusš
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Yes that is in line with my thinking. As a career broker from the old world (I have now left it), the key is to put an advanced platform in play with new tech, but the money will come from getting AUM into the platform and managing it. If FT can continue to build an execution capability across multi markets at almost zero cost, the competitive advantage will continue to be compelling. For old economy players who have to pay vast amounts of money to all sorts of different service providers to achieve this, the costs just keep racking up and the only place they end up is with us the clients.
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Personally, I do think that this is will end up being a monopolistic/winner-takes-all market.
Unlike neobanks, neobrokers have business models whose unit economics only lend to profitability at scale. Monzo charge the same as any regular bank, but theyāre also cheaper to run - Freetrade are cheaper to run than legacy brokers, but they charge less.
There has already been consolidation in the states (Schwab buying TD Ameritrade) where the neobroker market is more mature, for me this proves it.
So, yeah, iām very wary of competition tbh.
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Yup, and thatās the power of being able to scale with tech despite the regulatory barriers of finance. As long as your expenses donāt grow nearly as much as your revenue, you can achieve - in theory - a positive operating profit. Marketing and user acquisition is a huge variable cost, and you have to invest in R&D/capex (tech, which comes from hiring top talent), but if a company becomes synonymous with something (e.g. Zoom, Airbnb, Google, TikTok, Instagram, Robinhood (US)) you can reach that magical āescape volocityā, and users start signing up without a lot of advertising. Network effects work. In the UK, TransferWise, Monzo and Revolut managed to get there.
I remember when Zoom advertised on buses back in the day (in January this year) before Covid-19. That was when it was a boring B2C (corporate) business. They went from 10mm users in December to 200mm, if you believe the CEO.
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That might have played a role in those 150k clients.
The outcome will depend on the actual number of users you need to operate at a profit. If you need 100m + users, then yeah my guess is thereās only room for one or two players.
However, I suspect products like Freetrade to be very sticky, and customersā willingness to pay a recurring subscription could be high as well. If you manage to get a large percentage of your user base to pay every month then you can be successful with a proportionally lower total user count.
Neobanks who only offer gimmicks like metal cards in their premium offerings will have a hard time converting a large % of their user base. Paying for an ISA is a completely different discussion however, the math just makes sense because the alternative is going back to old-timers like HL thatāll rip you off. I think Revolut has that in mind, as it keeps adding more value to its premium offerings.
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Actually, medical travel insurance, disposable cards for online spending, virtual cards, card replacement - sent to any country, USD stock trading, cryptocurrency trading, price alerts, excellent FX rates, multi-currency accounts with higher withdrawal limits, and cash back on overseas spending (online from the UK and offline) cover the annual cost. Think American Express Platinum and JPMorgan Chase Sapphire for the middle class. Not all of them offer these options though.
Neobanks are not the main competitors for FT but the all-in-one solutions such as Revolut can become one. Their multi-currency accounts save a lot of money on USD/GBP currency conversion for US shares (they donāt have UK shares).
Squareās CashApp does checking accounts in the US - through an affiliate bank - as well as fast money transfers, US stock trading, cryptocurrency trading, and (soon) lending.
āMetalā cards are like Amazon Prime - making their services indispensable (Prime Video, Prime Now, Music, etc).
Itās a tough nut to crack and, judging by the chatter online, this is what Monzo is stuggling at with their Premium offering.
P.S. Free users still provide tons of data they can learn from.
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Oooā¦ I would be interested in Freetrade stockā¦ Missed out the last time
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Sticking with the 180k users mentioned above I would put the valuation at circa Ā£193M. Iām not sure where this puts the share price, something like Ā£3.50 at a guess.
To counter this high valuation, people are still trying to sell shares at Ā£1 on the buying/selling thread.
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These figures below are based on the assumption that the number of Freetrade allotted shares is currently 48609311.
Thus, if the Ā£193M was to be the pre-money valuation of the next investment round then that would equate to a Freetrade share price of Ā£3.97.
As a rough guide, the following table gives an idea of the potential Freetrade share price based on different Freetrade pre-money valuations.
| Share Capital | Share Price |
|---|---|
| Ā£50,000,000 | Ā£1.03 |
| Ā£75,000,000 | Ā£1.54 |
| Ā£100,000,000 | Ā£2.06 |
| Ā£125,000,000 | Ā£2.57 |
| Ā£150,000,000 | Ā£3.09 |
| Ā£175,000,000 | Ā£3.60 |
| Ā£200,000,000 | Ā£4.11 |
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