Wise Share Price Forecast After the Big Nosedive

Summary:
• The Wise share price has collapsed. Shares of the company that was formerly known as TransferWise, crashed by more than 6%

The Wise share price has collapsed. Shares of the company that was formerly known as TransferWise, crashed by more than 6% on Tuesday after the company published its trading statement. It is trading at 852p, which is about 10% below its highest level this month. 

Wise earnings

The Wise share price declined sharply on Tuesday after the firm published its trading statement. The results showed that the company’s volume in the quarter rose to more than 18 billion pounds, up from the  13.2 billion pounds in the same period last year. The company’s volume was about 16 billion pounds in the previous quarter.

As a result, the company’s revenue rose to 132 million pounds, up by 25% from the same quarter in 2020. It achieved that by having more than 4 million transactions in the quarter. Notably, the company did that have cutting transaction costs for its individual and corporate customers. The Wise share price declined because of the followings statement by the management:

“So looking ahead, our take rate is expected to be slightly lower in the second half of FY2022 compared to the first half as a result of price reductions, but we continue to expect revenue growth of low to mid 20s on a percentage basis for FY2022 over FY2021.”

The stock has also barely recovered after the company’s founder and CEO was charged thousands of pounds by HMRC for tax avoidance. There are possibilities that he will be pursued because he is a director of a publicly-traded financial services company.

Wise share price forecast

In my previous article on Wise, I predicted that investors would rush to buy the dips after the relatively irrational sell-off. That view was wrong as the price has remained under pressure since then. 

Now, turning to the two-hour chart, the stock has been in a bearish trend in the past few weeks. This trend is being supported by the 25-day and 50-day moving averages (MA). The MACD has remained below the neutral level while the Relative Strength Index (RSI) has crashed to the oversold level.

Therefore, for now, the path of least resistance for the Wise share price is to the downside. However, in the long-term, I suspect that the stock will stage a major recovery.