NWL -5.03%: the independent investment platform was out with its March Quarter update today and, despite strong Funds Under Administration (FUA) growth, the stock was hit the most since October last year on revenue growth concerns. FUA increased $6.7b in the period to $84.7b with $2.7b coming from net inflows, positive market performance accounting for $4b. While more money on the platform will support topline revenue growth, the company flagged the impact will be diluted given “tiered administration fees, fee caps” and lower average cash balances. NWL is trading on 55x earnings which suggests a lot of growth is built into the price. We suspect both revenue growth and operational leverage will be harder to come by than the market expects, and could prove a headwind for the space near term as expectations are tapered.
MM is now bearish NWL
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