Freetrade Valuation Model

I don’t know about 212 as they seem to be closed for business to the world nowadays but I have used Etoro for ages and while it is good in a few ways and has good adverts I find Freetrade to be soooo much better in almost every way. When FT add web based and crypto I really don’t see what Etoro would offer that FT doesn’t then do and probably much smoother for the user.

I would also believe in the FT team over others every day of the week and twice on Sundays :rofl: How many companies have the top brass on their forum often chatting to us plebs? No company will ever please everyone all the time but at least FT are very good at the PR bit most of the time.

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The competition hasn’t even begun yet.

And the competition is coming from a variety of sources - not just people who style themselves as brokers.

The competition will grow. Do you really believe that many of the mentioned brokers are just going to go away?

Why should the P/E of this business be the same as the P/E of a full Service provider?

It is easy to see why some people value the ‘number of users’ metric - it comes down to the low pricing model. The low pricing model for some niches is offset by the lack of needed features. Of course, the market won’t wait for Freetrade. Any business that takes it time on such things is gambling big time. Once say you go to competitor X then a certain type of investor will stay there for ever as X may provide everything they need or want at the price they need or want.

If the argument is let us catch them young and they will live us for their investment journey … well that is nice product management talk but actions speak louder than marketing power points …

None of us know what level of dilution will occur. The recent mess with Crowdcube tells us that Shareholders might not be looked after well. All risks to consider.

Ultimately, from an investor point of view this is a risky business. The investor has to ask themselves whether they are happy putting their money here as opposed to elsewhere relative to the returns they expect.

I don’t know what the median investment on CC is for FT. Perhaps it is not much and none of these things matter as the real losses (even opportunity ones) for many would be tiny.

Whatever you do when it comes to an investment don’t only think about the upside. Make sure you are comfortable with the downside.

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Nice points raised and touch on some of my issues with FT.

I would have thought FT would have at least added dividend information by now. Trading 212 is brilliant on that end , sure FT looks better but we do this for cash money not fancy apps.

It’s funny as I feel in love with FT back in the day but just now realized they are missing a lot of things for a 650m valuation.

Still have a few days to decide… :+1::thinking::thinking::thinking::thinking:

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Etoro prides being able to copy other people’s portfolio while trading 212 have lovely graphs, great info and a great UI.

Im sure FT will get there some day hopefully now with the EU in they batter on and get some of the basic things we have asked for before trying to conquer the world.

Its all good trying to get Asia etc but at the same time you need to keep FT users in the UK etc happy.

Another point which hit me last night, the pitch deck and supporting info was very very weak.

No breakdown of people paying for premium , Isa pension, future app development etc.

When was the last time you invested money knowing so little about a company when they pitched for your cash?

What do people think about the overall plan for FT. Is it just open up in markets , get as many users as possible then put up the for sale sign. Or is it going to be a genuine long term player in financial markets?

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welcome to crowdfunding :slight_smile:

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One interesting thing that I have realised is how useful an ISA/SIPP is from a competition point of view. Even if pricing is better say with Degiro** the fact that Degiro doesn’t offer ISA’s/SIPP for UK residents creates a competitive advantage for UK traders plus they can charge a bit more than trading companies that don’t provide such things. OTH, it means that UK providers that compete in mainland Europe or other places don’t have a “captive customer base” in those tax residencies - thus the competition will be greater and the margins will likely be smaller.

You can see the phenomenon very easily when you consider the US. If you are not interested in a ISA/SIPP you can easily trade there for 0 commission and custody with excellent buy/sell and limit stop/loss orders. The differentiator is service breadth and quality.

** I am using this name for illustrative purposes. It may be that this particular company doesn’t provide a cheaper product in all scenarios. The example doesn’t detract from the general point being made.

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If you append ‘and investors can retire on the proceeds’ that sounds good to me. :sunglasses:

Or is it grow too quickly and underdevelop the app which leads to competition taking all the gains from free trade opening up the markets?

It used to seem so clear cut but the last three months have changed things omho

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I made some basic updates to this model for 2023 in case anyone is interested. I’ll likely update it when we get more details on Tuesday.

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Assumptions: Refreshed discount rates to reflect the new macro environment, brought target maturity date closer as FT shifts priorities. Reduced probability of a successful IPO/exit to 75%

Forward Model: Updated to reflect new pricing plans increasing revenue rates, reduced AUA estimates, especially in the bull case to reflect pared back expansion plans

Peers: refreshed data where possible, many of the private companies haven’t raised in the new environment so we don’t have accurate data for them

Sensitivity Analysis remains the useful part in my opinion to let you decide what story you are telling for FT, no changes just swapped the peers.

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A lot of people at requesting edit permissions - please save a copy to make changes/play around.

If you do make any fixes/improvements please let me know and I’ll update on my side.

We can’t access the sheet…pls make it public read

Oops thanks, sorry I’ve updated it now.

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Great work on that and thanks for sharing!

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I’ve updated the current price and share count.

I’ll review the revenue model once details are out, I doubt I’ll change much though - unless we get more details on share lending it’s going to be tricky to model.

I think Adam mentioned 14% adoption of premium plans, average assets of Standard: £8k and Plus: £30k which is extremely close to my current assumptions.

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Just to add a little bit more clarity on the share count, there are currently 81.617m fully diluted shares outstanding. In conjunction with this round, an additional 4.973m anti-dilution shares will be created, bringing the total to 86.591m shares.

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Please expand on why anti dilution shares are being granted and who to? Does this include the convertible loan notes?

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Same question.
Could you explain, please:

  1. who gets these almost 5m shares?
  2. what price is paid for them?
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Would also like this answered. I believe it was mentioned there was no VC participating in the round…so what’s happening with these shares?

Any official word about valuation of the imminent crowd fund?