(WISE:LSE), the fintech unicorn, has had a rough start to the year. Shares dropped over 10% on Monday alone and are down nearly 20% since the start of the year. WISE is currently trading at ~606 pence, a long way down from the peak price of ~1150 in September 2021. The company had a blockbuster IPO and successful start to life as a public company but has run into trouble in recent months. Has the sell-off gone too far?

Tech sell-off

Nearly all technology and growth shares have struggled so far in 2022, as many investors are concerned that high growth expectations are looking increasingly difficult to achieve in this year’s interest rate environment. The Federal Reserve is expected to start restricting their monetary policy and raise interest rates to combat rising inflation. US CPI’s latest value was 6.8% year-on-year and economists are expecting for this to increase even further in the coming months. As a result, most banks are now forecasting multiple interest rate increase this year.

Mixed opinions

Wall Street analysts surveyed by Bloomberg currently have diverging views on Wise shares. 40% of analysts currently have a “BUY” rating, with another 40% with a “HOLD” (neutral) rating. 20% have issued a “SELL” rating.

Citi sparked the latest sell-off, as the bank downgraded their analyst view on WISE from HOLD to SELL on Monday, stating that the company’s growth expectations were excessive. Despite the mixed views, the consensus 12M target price across analysts is currently set as ~860, representing a potential return of 42% from the latest price.

Recovery trade

Whilst WISE is indeed a member of the high growth and high risk stocks club, the current price levels look oversold. The latest financial results, H1 2021, saw revenues increase 33% compared to the prior year, and the company has also been consistently profitable since 2017 – a feat which many other unicorn stocks cannot claim. WISE also boasts over 11 million users and has made ambitious moves in expanding both their digital banking products and geographic coverage. If one can look through the short-term noise and market volatility, this could be a Wise bet.

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