Freetrade: Free Share Trading

I think locking the vast majority of stocks behind a paywall is the very definition of the antonym for accessible.

They’re literally not accessible unless you pay. And for most beginner investors, the fee will wipe out any sort of returns they’d hope to make. It’s not viable for them, and I think the universe restrictions are far more limiting than people appreciate.

It favours those with greater financial reserves, just like the industry they’re here to revolutionise. Only when I weigh those up in line with my approach, they’re still more expensive than those for what you get.

I don’t mind the freemium model, I actually think it could work. But it’s a shame they feel like there’s not enough value to justify them, or they can’t figure out better ways to create that value, that they feel like they need to paywall stocks to get people to pay.

This latest change to their pricing structure is the final nail for me, mostly because it takes something existing for basic users once again, and locks it behind a monthly fee. I’m now convinced they’ll keep treading that path until there’s eventually not much left for those who don’t subscribe to a monthly fee, so I’m getting out now.

It’s a shame robinhood pulled back on their U.K. plans. Freetrade could use the competition I feel. They have none really, and it shows in their approach.

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Freetrade considers sale as buzzy ‘fintech’ valuations crumble

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I’ve always thought that a Monzo / Freetrade tie up would be in both companies’ interests.

I wonder how much Freetrade would have to reduce in value for Monzo to be interested?

More generally, it would be interesting to know where Monzo has got to with investment services.

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Same! If Freetrade don’t wanna continue as an indie, that would be be my ideal merger. Best new marriage since Octopus x Bulb. As long as the big banks don’t show up at the alter to protest, should be fine.

I think it depends more on the willingness of Monzo’s investors to back it than it being a case of the price being low enough imo. Loss leading startups have been known to make very large acquisitions off the backing of investors in the past. Freetrade is largely crowdsourced though, so wonder what it all means for their investors.

If Monzo can effectively recreate their own Freetrade though, and provide the same paid for benefits as part of my standard plus membership, I’d leave Freetrade for them anyway, so they might not necessarily need or want to buy them at this point.

My one concern though is, do Freetrade have any way to transfer out yet? Or is it still a case of sell your holdings?

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Yes - I transferred out a portfolio of shares in specie recently and was impressed that it took less than a couple of weeks.

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So I think there are two (maybe three) primary pieces of value in Freetrade:

  • The direct connection to the London Stock Exchange. As I understand it most use an intermediary but Freetrade is direct (I think of this a bit like having a direct faster payments connection, or your own card processor).
  • The user base and assets under management.

From a Monzo perspective, the prize would be to reduce the cost of their investment platform through the Freetrade stack. They could also potentially monetise the customer base more efficiency, generate back office/tech savings and provide a more compelling paid offer.

I suppose the big strategic questions are:

  1. does Monzo want to do direct share trading (I’m assuming that their investment products will be more about funds or ETFs than individual shares)?
  2. does the cost of the acquisition/integration make commercial sense?
  3. does Freetrade’s international footprint (Sweden/Australia etc) help or hinder Monzo’s own expansion plans?
  4. would Freetrade integration be an unhelpful management distraction?
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I dont think Monzo has been confirmed anywhere as the interested party (so this is all speculation), but it would certainly make some sense.

As an investor in both companies and user of both services, i’d be very keen to see a merger/buyout.

Monzo is slowly and steadily killing it in retail banking. Their assets under management are ballooning but likewise they have many billions of assets not under management (millions of users with balances elsewhere), and their investment offering - while extremely slick - is not really anything to throw your money at. It’s basically an outsourced cash savings account with a couple of tiny banks you probably never heard of, where you can get slightly less interest than going direct, so having great new investment features and optionality within Monzo could be very valuable to them.

TS Anil mentioned big things to come with investment features in Monzo, and other than having a few white-labelled etf trackers to create as pots (could be very cool but dont think it should take years of development to achieve) i cant really imagine what can be so fantastic about their in-house features on the horizon.

How they would integrate a full (ish) stockbroker like Freetrade into the Monzo app, i have no idea. Maybe have it as a side play eg. MonzoTrade and allow balances and details to show seamlessly in the Monzo app? Get greater scale than freetrade ever could by pitching it to 7 million users while they’re managing their money? I dunno.

Freetrade went on a tear but has quickly been blown off course and quite far up a creek.I’ve written down the estimated value of my shares by around 70% from that highest valuation, and i think Monzo would be looking at that range as well. Could be wrong on that, but somehow doubt Freetrade would be punching at their long awaited unicorn valuation when most of their free share signups have probably been annihilated by the tech and meme stock devastation.

I worry that if it is Monzo who is looking at Freetrade then there is a risk that they are just tyre kicking to gather ideas for their own in house products and trying to flex (no pun intended) their newly developed muscles upon the fintech market.

In case it was not clear…the above ramblings are all speculation and you should not believe any of it as fact :upside_down_face:

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Again, read my post explaining why Monzo will not buy freetrade.

What do we think Freetrade would be sold for?

Previous valuations are here:

R5 was 44m
R6 was 141m
R7 was 651m

(h/t to @freetraderajb on the Freetrade forum)

£100m if they’re lucky?

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I just don’t see what’s in it for Monzo, to buy them, and then try integrate, when it’s probably cheaper and easier to roll our own. It’s not even like you’re buying some huge customer base or I would guess a massive different one

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Interesting news…

One industry source said the discussions with JP Morgan were unlikely to result in a deal being agreed, while it was unclear at what valuation the negotiations had been taking place.

… or maybe not!

My sad suspicion is that any interested parties will probably wait until FT is towards the end of its runway, then pressurise into a low ball valuation figure.

Hope I’m wrong.

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Yeah, so I’ve started selling my holdings with Freetrade. All but 1 share in everything I own.

Will either just go into my nutmeg for now, or I’ll put it all in PCT with Charles Stanley. Stock market is in a bit of a slump atm anyway.

Hopefully they strike a deal with someone, or Monzo’s investing product turns out to be more like a Freetrade than a Nutmeg.

Freetrade is a great addition to our market. Maybe that makes it unviable? But it’s fantastic for consumers, makes investing accessible to all, and the model seems to work well in the US.

I’m a bit sad about pulling out because of the uncertainty.

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It’s listed as a trader on LSE, I think is the main advantage - difficult to achieve.

Still, I too don’t think Monzo would acquire them. Not just for practical reasons but because they don’t have any money to do it with. If their investors wanted to buy it, they’d just buy it directly.

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