The share price of UK-listed cash switch firm Clever (LSE: WISE) has taken an enormous hit immediately (13 June). As I write, it’s down a whopping 17%.

So what’s occurring with the FinTech inventory? And is that this an important shopping for alternative for development traders like myself?

Unpacking immediately’s full-year outcomes

This morning, Clever posted its preliminary outcomes for the monetary 12 months ended 31 March. And the figures have been typically fairly good.

For the 12 months, income got here in at £1,052m, up 24% 12 months on 12 months. In the meantime, primary earnings per share (EPS) have been 33.7p, a rise of greater than 200% on the 12 months earlier than. This EPS determine was forward of the consensus forecast (32.1p).

Nonetheless, there have been a few issues within the outcomes that spooked traders. One was a variety of discuss funding for development and funding all the time appears to scare traders off, despite the fact that it’s often useful in the long term.

The opposite issue that rattled traders was steering, which was weaker than anticipated. Trying forward, Clever stated that it expects 15-20% development in FY2025 underlying earnings versus a 31% enhance within the monetary 12 months simply handed. That’s a major slowdown in earnings development.

It’s price declaring that traders are at the moment punishing any expertise firm that produces barely disappointing steering. I’ve skilled this primary hand with shares like Sage and Snowflake, each having been hammered this quarter as a result of weaker-than-expected steering.

Time to purchase?

Whether or not it’s time to contemplate shopping for this inventory is basically arduous to know, for my part.

On one hand, the corporate’s nonetheless rising at a wholesome fee. On the finish of March, it had 12.8m prospects, up 29% 12 months on 12 months. The group notes in its report immediately that proper now, it’s serving lower than 5% of the individuals who have the necessity for worldwide cash transfers and fewer than 1% of companies.

In the meantime, its valuation doesn’t look loopy on the present share price. Given the FY24 EPS determine of 33.7p, the trailing price-to-earnings (P/E) ratio is simply 21. That’s not excessive contemplating the extent of development.

Alternatively, the inventory’s in a fairly nasty downtrend proper now. Right this moment’s fall is the second giant droop since April. Shopping for right into a downtrend like this may be very dangerous. I’ve learnt that the arduous method.

And there are nonetheless a number of query marks in relation to the corporate’s enterprise mannequin and moat. Firstly of FY25, the agency decreased its charges for purchasers additional. This transfer – which means that competitors from rivals is intense – isn’t very best from an traders’ perspective. I prefer to put money into corporations that may constantly enhance their costs and increase their revenues within the course of (like Sage, for instance).

My transfer now

Personally, I’m going to go on the shares for now and watch them from the sidelines. There are undoubtedly causes to be bullish on Clever. Nonetheless, I’m not speeding to purchase the inventory immediately given the ugly share price development.

All issues thought-about, I believe there are safer development shares to purchase for my portfolio in the intervening time.