Searching for stocks to buy with long-term growth potential? I think Wise (LSE:WISE) is worth a closer look, even though shares of the international money transfer firm dipped this week despite another solid update.
Might this be one of the best UK growth stocks to consider buying today on weakness?
Business as usual
For those unfamiliar, Wise makes money from three core sources: moving money across borders, everyday card and account usage, and earning yield on customer deposits.
In Q2 FY27, each one of these streams grew impressively. Cross-border volume increased 22% year on year to $71.7bn, with active customers up 20% to 12.5m. An impressive 78% of transfers were instant, up from 74%.
Wise went live in Malaysia with its ninth direct banking system integration. And its global payments infrastructure for banks and enterprises (Wise Platform) attracted OakNorth (a digital bank for entrepreneurs) and German’s Vivid Money.
They joined the likes of Monzo, Nubank, Morgan Stanley, and Standard Chartered. Wise Platform now accounts for roughly 6% of cross-border volume, progressing towards management’s medium-term target of 10%.
Turning to cards and accounts, customer holdings jumped 28% to $43.5bn, with card spend volume growing 30% to $14.3bn. This shows that customers are relying on Wise for more of their everyday finances.
The firm launched Wise Account and Wise Card in Thailand, a popular hotspot for tourists and expats with international payments needs. Its investment account (Wise Assets) was introduced in New Zealand.
Here’s how all that translated into revenue:
| Revenue | Growth | |
|---|---|---|
| Cross-border | $355m | +16% |
| Card and other | $206m | +34% |
| Net interest income | $178m | +17% |
| Net revenue | $739m | +21% |
What’s wrong then?
Notably, non-cross-border services now generate the majority of net revenue (52%). In my eyes, this shows that Wise is becoming a diversified financial platform.
However, there’s another reason: it continues to aggressively lower its cross-border take rate. This has gone from 0.59% two years ago to 0.49%.
Consequently, volume grew faster than cross-border revenue. Clearly, the market’s having a hard time buying into this growth-over-profits strategy.
My take
As a long-term shareholder though, this is what I want to see. The strategy’s working by attracting more people and businesses, including large banks and fintechs, and Wise is successfully expanding its relationship with them.
Traditional banks have long treated cross-border foreign exchange as a cash cow, charging high and opaque mark-ups. By relentlessly driving transfer fees toward zero, Wise is disrupting a massive global market. It ultimately aims to move trillions.
Between 2026 and 2029, small- and medium-sized enterprise (SME) overseas payments are projected to grow by 22%. Yet Wise has currently captured less than 1% of global SME and enterprise flows.
Therefore, the opportunity to land more business customers and offer them services and generate interest income on customer balances is substantial.
Top stock?
Now, Wise is facing a money laundering investigation in Belgium. We don’t know what will happen, but a hefty fine could damage the firm’s reputation. A global economic downturn resulting in less international transfers is another key risk.
However, management expects FY27 net revenue growth towards the upper end of 15%-20%, with the pre-tax margin near the top of its 20%-25% target range. And with the stock trading cheaply, I think it’s well worth considering.
For the record, Wise remains a top-10 holding in my own portfolio, as the long-term growth story remains very much intact.
Should you invest £5,000 in Wise Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Wise Plc made the list?
Ben McPoland owns shares in Nu Holdings and Wise.
This story originally appeared on Motley Fool
