April 7th, 2022 | 14:38 CEST
Deutsche Bank, Commerzbank, wallstreet:online, TeamViewer: Exploding interest rates - look at brokers and financial stocks now!
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Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Deutsche Bank and Commerzbank - The return of the capital market interest rate
After several announcements, the US Federal Reserve initiated the interest rate turnaround in mid-March, but because of the developments in Ukraine, the ECB is waiting for the time being. Inflation experienced a massive boost in 2022 due to the explosion in energy and commodity prices, so central banks would be obliged to intervene under their statutes. However, the economy is now threatening to crash, and a premature turnaround in interest rates would cause investments to collapse once again. That puts the monetary authorities in a dilemma because the 10-year capital market interest rate has reached 0.67% in just 4 weeks, having been negative at the start of the war.
Significantly rising earnings for financial institutions due to higher interest rates are not yet to be expected in the eurozone in the near future. However, the pressure on the ECB is steadily increasing. Most recently, Deutsche Bank CEO Christian Sewing also expressed his views. He is also the German bank president and expects the ECB to react soon to the renewed rise in inflation. He is speaking with a double heart, as he would like to finally see more adequate interest margins again for his own bank.
The ECB's overriding goal is stable prices in the eurozone in the medium term, with an inflation rate of around 2%. In the last 10 years, this figure has been reached. However, in March, it jumped to the record level of 7.5% in the currency area of the 19 Euro countries. Higher interest rates might combat rising inflation, but the price drivers are not rooted in a demand boom but in a long-standing supply-side disruption that crept in with the Corona pandemic.
The Governing Council will hold its next regular meeting on April 14. Higher interest rates would, of course, also be a boost for the top dogs Deutsche Bank and Commerzbank. The income from a key rate hike in 2022 would be spread over several years. Both banks earn about EUR 400 million through their lending business in the first year alone if interest rates rise by 1%. It is no wonder that the charts of the major banks are currently climbing steeply; the pickle period finally seems to be over. All banks have rallied by about 30% since the FED hike. Before entering the market, wait for consolidation.
wallstreet:online - Next push on the customer side to be expected
For brokers in Germany and Europe, the strong increase in capital market turnover in recent years comes at the right time. With their new digitalized trading platforms, they can offer much more service than a traditional bank can provide over the counter and by telephone. Today, anyone who wants to buy securities reads forums and news providers for opinions and company publications. Historically, it has been shown that the traditional bank investment advisor cannot offer much added value in terms of capital investment.
For wallstreet:online AG (W:O), things are currently going like clockwork. The need for service was recognized early on, and the Company now manages customer assets of over EUR 8.8 billion in its new "Smartbroker" business segment with more than 246,000 portfolios. As a result, the average portfolio volume is around EUR 36,000, significantly higher than that of well-known competitors. According to the Company, a powerful app is also not far off.
At the beginning of March, W:O announced its preliminary business figures for fiscal year 2021. Again, it was a record year, with revenues jumping 82% to EUR 51.4 million from EUR 28.2 million. EBITDA adjusted for new customer acquisition costs increased by 45% to EUR 17.5 million from EUR 12.0 million. Due to the high investment costs in personnel and marketing, unadjusted EBITDA was somewhat worse at EUR 3.9 million. Still, the growth that can be generated from this should be significantly higher. That is because W:O will, of course, live on the number of customers, media reach and invoiced transaction volumes in the future. The traditional portal business grew by 32%, with page impressions increasing from 3.4 to 3.9 billion.
The outlook reads accordingly: considering the dynamic business performance and the record financial year achieved, the Company's management anticipates approximately 25% higher revenues in a range of EUR 62 million to EUR 67 million. They also expect adjusted EBITDA after customer acquisition costs of EUR 10 million to EUR 12 million for the current financial year 2022. With a market capitalization of EUR 253 million, the valuation is still far below Trade Republic's last billion-dollar round. The research experts at GBC consequently raised the price target to EUR 38.60 in their latest analysis. Once the spooked investors return after the Ukraine shock, the W:O share with its extensive securities services will probably quickly be one of the stock market stars of 2022.
TeamViewer - Technical breakout failed for the time being
Not from the financial sector but comparably strong on the digitalization side is the remote maintenance and communication specialist TeamViewer. We have discussed the share many times before. Most recently, the figures for 2021 were convincing. The Goeppingen-based Company achieved billings of around EUR 548 million, which equates to a growth of 20% compared to the previous year and was able to meet the forecast, which was recently revised twice.
Thanks to significant cost savings in the final quarter, the ailing software provider earned slightly more than recently forecast. This temporarily delighted the TeamViewer investor community, and the share took off up to EUR 16, but that was the end of the story. In 2023, TeamViewer's billings should rise to more than EUR 1 billion. Investors will determine whether this is realistic on May 4, when the first-quarter figures are released. Due to the ongoing home office trend at the beginning of the year, the corresponding growth leaps should be clearly visible.
Technically, we had recommended the entry at below EUR 13 several times. Although the sustainable breakout has failed to materialize, for the time being, the share will make further attempts to the upside in the further course of the year. Takeover rumors are also coming to light again and again. Use the current sell-off at around EUR 12.70 to re-enter the growth stock. However, a STOP at EUR 11.50 is strongly advised. Nevertheless, be careful: TeamViewer is very volatile. A 5% daily fluctuation is not uncommon.
The big home office wave appears to be dying down with the start of spring. That means the typical digitization winners are somewhat sidelined. But the new habits are here to stay, and flexible people, in particular, are clinging to the advantages of the digital world. At home, on the screen, you can also order securities undetected during working hours. This trend is driving securities customers away from traditional banks to neo brokers. wallstreet:online cleverly combines the necessary services under one roof and is currently favorable.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
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