The micro-investing platform had a day out yesterday, shooting more than 13% higher after it placed $10m of stock with media group Seven West (SWM). The shares exchanged hands at $1.617/sh, in line with the 10-day average, and gives Seven a 6.6% stake in the company. Of the $10m, only $2m will be paid for in cash, with the other $8m to be used in an advertising campaign across Seven’s television, paper and digital media offerings in an effort to accelerate growth. It’s an interesting deal for an interesting business. Raiz has more than half a million users with over $1b on its platform but will need to scale up significantly if it is to swing to a profit after posting a ~$5m loss in FY21.
The target market is huge though and structure allows Raiz to earn revenue from a range of sources – account keeping & maintenance fees, advertising to users & capturing the spread on some trades are its main sources at the moment. We like the deal, while there is plenty of risk in execution of the strategy, there looks to be a big opportunity.
MM likes RZI from ~$1.70
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