In a generational event that saw a major influx of investors entering the sharemarket looking to capitalise on the low prices, these same Mum & Dad investors as well as the younger generation have not only driven the market recovery but are now the engine pushing the economy to new heights.
This was reflected in the FY21 results presented by online broker Selfwealth (ASX: SWF) whose core market is retail investors, of which the Company reported a 105% increase in active traders for the year to 95,189, as well as a 147% increase in total trades to 1,630,18.
In summary, this rapidly growing cohort of retail investors that bought into the market when it crashed are evolving to become more active investors, happily investing their income where it might have previously been spent on international travel and other indulgences.
On average, each investor made 17 trades throughout the year where SelfWealth tacked their brokerage fee onto each trade, generating $18.4m in revenue for the year, a 135% increase on the previous year which included four months of frantic pandemic-induced trading.
“FY21 was a transformational year for SelfWealth which saw your company cement its position as a major participant in the Australian Online Broking industry,” said SelfWealth Chairman, Rob Edgley.
“We effectively capitalised on these favourable external trends and have more than doubled the number of Active Traders using our platform over the past year.
“This growth is due to both the increasing numbers of new investors wanting to grow their wealth by investing in equity markets, and also increasing numbers of existing investors switching from the bank aligned broking platforms to SelfWealth for lower cost, better user experience and the reliability of our platform.”
Despite the massive influx of retail investors onto their share trading platform, the big boost in revenue was countered by investment in their technology upgrades to provide customers with better user experiences. This resulted in a $646k net loss for the year, but the Company is still well positioned with $7.5m cash in the bank as of 30 June 2021. This was further increased by successfully raising $11.74m from investors in July 2021.
Since the release of the FY21 number of customers, SelfWealth surpassed 100,000 active traders on their platform on 10 August 2021 and is now the fourth most popular online platform, surpassing one of the Big Four banks.
“We see the continuation of favourable external trends, including low-interest rates and the ongoing digitisation of investment markets, underpinning the addressable market growth and we are confident that the Company is well-positioned to deliver ongoing growth over the years ahead,” said SelfWealth CEO, Cath Whitaker.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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