In information out immediately (5 June), Clever (LSE:WISE) introduced that it’s planning to checklist its shares within the US. The transfer would see the US itemizing develop into the corporate’s major one whereas sustaining a secondary itemizing on the London Inventory Change (LSE). The information got here as a shock to some, however the inventory rocketed over 12% larger on the information. Right here’s what I believe occurs subsequent.

Implications for the market

For the LSE on the whole, it’s not nice information. It’s one more firm shifting to the US. For a number of years, there have been worries about low valuations and weak liquidity in UK markets, which has meant a number of administration groups have determined to look throughout the pond.

Some firms have moved to the US with the first itemizing after which determined to cancel the UK itemizing altogether. There are not any rapid indicators that Clever will do the identical, but it surely’s most likely a thought behind some traders’ minds.

When it comes to the specifics why Clever has chosen to maneuver, the CEO commented that “we believe the addition of a primary US listing would help us accelerate our mission and bring substantial strategic and capital markets benefits to Wise and our owners”. He additionally famous the US is “the biggest market opportunity in the world for our products”.

Good for Clever

The rapid response to the share price clearly reveals optimistic sentiment. Firstly, being listed within the US will enable retail traders there to extra readily purchase the inventory. But greater than that, the itemizing will create extra publicity across the enterprise. If Clever can then achieve extra traction and scale, it is going to develop income and income. This, in flip, ought to assist the share price of the UK itemizing rally.

With the second itemizing, Clever will be capable to elevate extra capital. This can be utilized to develop new merchandise and improve the providing to purchasers. I see this as a superb factor, because it means the enterprise doesn’t have to make use of debt and even retained earnings to gasoline its progress.

Some considerations

As a fintech firm, Clever faces quite a lot of competitors. Not solely are there different disrupters on this area, however conventional banks are additionally making an attempt to regain among the misplaced market share. Subsequently, Clever has to attempt to keep forward of the sport; in any other case, prospects might be simply misplaced.

One other issue is valuation. With a price-to-earnings ratio of 97, it’s definitely not low-cost! The inventory is up 45% over the previous 12 months and has hit recent 52-week highs this morning.

I believe the optimism across the soar immediately ought to ease off, however after I have a look at the inventory with a long-term lens, I believe the transfer to the US might be a sensible transfer. I’m placing it on my watchlist to contemplate shopping for as soon as the mud settles on this information.