WiseTech Global (ASX:WTC) Is The Cheapest Its Been in 5 Years

Why WTC Is More Volatile Than Xero and Megaport

WiseTech is trading at its cheapest level in five years.

And it is not happening in a vacuum. Investors have already felt the bloodbath across SaaS lately. Today alone, WiseTech opened down 15%, while Xero was down 4% and Megaport was down 4%.

So the question investors are really asking is this: why does WiseTech look so much more sensitive to price moves and narrative shifts than the broader SaaS tape?

In our previous article from a few days ago, the moral of the story was that valuations had run too far ahead of fundamentals. The stock price was baking in growth expectations that left no room for disappointment. When the market mood turns, those are the setups that usually get hit first.

That brings us to the narrative doing the rounds right now: “SaaS is killed by AI.”

In our view, that take is overdrawn and more on the irrational fear-driven sentiment.

AI is not some universal substitute for software. In most cases, it is a layer that makes software more valuable, more automated, and more embedded in workflows. Yes, it can change how pricing works and who captures value in parts of the stack. But the leap from “AI changes software” to “AI kills SaaS” is a headline, not an argument.

The more practical way to think about what is happening is that the market is repricing risk. When expectations are high, duration is long, and the narrative gets shaky, multiples compress fast. WiseTech is simply experiencing that dynamic more aggressively than some peers right now.

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The Sell Off Is a Risk Premium Reset

Overnight, markets sold off on renewed fears that rapid AI capability is going to compress margins and reduce pricing power across software and other service industries. That theme was explicitly cited as a driver of a broad US session selloff, and it did not stop at tech.

If you zoom out, this is how we think about it.

Across SaaS, there will be clear winners where margin expansion and earnings growth continue to compound. And there will be businesses with smaller moats that get challenged as AI lowers switching costs, increases transparency, or commoditises parts of the workflow.

But we do not think that is the core concern for WiseTech.

WiseTech has an extra risk premium attached right now, largely because of the acquisition of e2open. WiseTech tends to move more because investors are still underwriting several company specific uncertainties, and that raises the required return.

The biggest one is execution risk.

WiseTech’s own FY26 outlook explicitly flags EBITDA margin dilution from the initial consolidation of e2open, with FY26 guidance implying EBITDA margins around 41%. That is not a signal of a deteriorating moat or intensifying competition. It is what you would expect when you absorb a more resource intensive acquisition: near term costs, integration work, and a lag before synergies flow through.

The market is not debating whether the strategic logic can make sense. It is debating whether management can execute cleanly and on time. And until the integration milestones start landing with confidence, that execution question is the main reason the stock is carrying a higher risk premium and reacting more violently to narrative shifts.

98% Retention Says Sticky, The Tape Says Scared

One of the cleanest indicators of moat in SaaS is the quality and durability of recurring revenue. It is not just about growth, it is about how sticky the customer base is when budgets tighten and competitors get loud.

For WiseTech, the headline here is customer retention. If 98% of customers stay, that is telling you the product is deeply embedded and genuinely high value. It is also telling you churn is not being driven by price.

And that makes sense when you think about how enterprise software decisions are actually made.

Switching platforms is painful. It is not a simple “we found a cheaper vendor” decision. You are talking about operational disruption, implementation risk, retraining teams, data migration, process redesign, and months of internal change management. The switching costs are real, and the consequences of getting it wrong are career limiting for decision makers.

So in practice, large organisations do not rip out mission critical software because someone offers a slightly cheaper price. For a board and senior management team to even consider moving, there usually has to be a strong trigger: a clear functionality gap, repeated service failures, a material strategic shift, or a compelling step change in value.

That is why retention and recurring mix matter so much. They capture the outcome of the moat in a way that revenue growth alone cannot.

And it is also why I think the market is missing something in the current narrative. If the product is sticky, the customer value is high, and switching is hard, then the default assumption should be resilience. The debate should be about the pace of growth, the integration execution, and the margin trajectory, not whether WiseTech’s platform suddenly becomes optional because AI exists.