We believe wealth technology platform HUB24 is the best in class as its growth and increasing FUM suggests but valuation is the key here. We believe AI is more likely to squeeze margins and intensify competition than “kill” HUB24, and its best defence is using AI to deepen adviser workflow lock-in. The recent correction across the software space hit HUB yesterday taking the stock down 10.8% as investors spread the software selling further across the ASX.
When your already the best it’s like sitting on top of the mountain waiting for the next challenger and AI could make this easier and cheaper which is not ideal for HUB, although moving client assets between platforms is a pain and advisors need a good reason to jump with price and quality, the two levers, hence the concern around margins moving forward.
- We love HUB as a business, and these sorts of operations are extremely difficult to replicate- we doubt AI will eat HUB’s lunch, but it could put pressure on sector valuations, which can drag down the share price – we are considering taking profit on HUB.
MM is neutral towards HUB around $88
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