Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

This FinTech Stock Is Like Buying Square At $13

Companies / Tech Stocks May 08, 2019 - 09:06 AM GMT

By: Submissions

Companies We all know names like PayPal (NASDAQ: PYPL market cap: $131 billion) or Square (NYSE: SQ market cap: $29 billion). Sure, these stocks present an opportunity, even at these levels, but imagine getting Square at under $13 per share or Paypal in the low $30s. You would have earned returns in multiples.

While these types of opportunities are long behind us when it comes to PayPal and Square, there are a few plays in the FinTech sector that are just starting to heat up. In my opinion, one Canadian FinTech player has the potential to be one of these opportunities in the future.


Mogo Finance Technology Inc (NASDAQ: MOGO)

PayPal had the benefit of being one of the first to the FinTech space in the United States, as was the case for Intuit (NASDAQ: INTU), and other big players. However, what we would call big players have yet to emerge in Canada. At the end of the day, FinTech adoption in the region has been relatively slow, with the country ranking in the bottom three among other developed nations.

Nonetheless, we’re starting to see adoption of financial technologies picking up in the region. In fact, we’re seeing emerging market-like activity in the region with adoption rates gaining in multiples. As such, those on the leading edge of this trend are likely to take the lion’s share of the market later.

This is where Mogo, or Money-On-the-GO, comes in. The company is no stranger to the FinTech space, often being referred to as a pioneer. As a result of its early entrance in Canadian FinTech, the company already has a sizeable advantage over its competition and is now providing services to more than 800,000 members. These users take advantage of various products offered through its app, including finance management, banking services, lending services, cryptocurrency wallets and more.

Moreover, experts are expecting that this growth will continue. Zachs just issued a report covering Mogo and suggesting that the stock is actually worth US$7.67 per share as it sits. Craig-Hallum, a noted analyst known for accurate opinions in FinTech, recently set a price target of US$7 per share on the stock.

So, what’s driving the strong analyst opinions? The fact that the stock is highly undervalued. When compared to its American and European counterparts, the stock is trading at a fraction per user than what we see across the space. Chime and N26 currently trade at a rate of $500 and $1,175 per member, respectively. With an implied per member valuation of approximately $125 today, Mogo currently trades at a 75% to 90% discount to its American and European peers.

To really put Mogo’s valuation into perspective here, all you have to do is take a look at another public Canadian fintech, Lightspeed (TSX: LSPD).  The newly public company currently has a market cap of around $1.7 billion which is about 18x greater then Mogo’s current market cap of around $90 million.  However, when you compare Lightspeed and Mogo’s recent financial results, the two companies look more closely aligned.  Specifically, in the two companies most recently reported quarter (Q4 2018), Lightspeed’s revenue was C$20.1 million compared to Mogo’s C$16.1 million while Lightspeed’s year over year revenue growth was about 34% compared to Mogo’s core revenue growth of about 74%.

Another good example of the company’s undervaluation comes from an Australian FinTech player known as Afterpay (OTCMKTS: AFTPF market cap: $4.6 billion). Essentially, Afterpay allows its users to shop online for items now, and puts them on an installment plan, allowing them to make small monthly payments until the balance is paid off.

Afterpay has started to take of in Australia as a result of its no-fee business model. To earn its revenue, Afterpay charges retailers a flat fee plus a percentage of the purchase each time an item is purchased using their installment plans. This allows Afterpay to earn revenue while providing installment loans that are free of any fees, including interest charges.

However, Afterpay does generate about 17% of its revenue from customers. This comes from late fees when installment loans are missed. Nonetheless, consumers enjoy the ability to make online purchases with zero-fee loans, leading to more than 2 million users on the platform as of July 2018.

Afterpay’s market valuation is currently around $4 billion which is about 11x what analysts are currently projecting for their 2020 revenue.  This compares to Mogo’s current market valuation of around $90 million which is less then 2x what analysts are currently projecting for Mogo’s 2020 revenue.

Moving forward, the opportunity is only likely to grow. Not only are we seeing incredible growth in adoption of FinTech options in Canada, Mogo is staying on top of the trend. The company is constantly adding new capabilities, listing to its customers and providing solutions tailored to them. Mogo’s freemium model, which allow its members to opt into its subscription fee services, make the company a disruptive force in the Canadian banking industry which is known for charging high customer fees even for products most consumers now expect for free like a basic checking account.

All in all, Mogo is operating in an emerging Canadian FinTech market and doing so with compounding success. The company is seeing strong growth as millenials look for faster and more cost efficient alternatives to high-cost traditional banking. This, combined with the company’s early leadership, continued innovation, and its recently announced acquisition of Difference Capital (TSX: DCF), suggests that the recent gains that we’ve seen from the stock are just the tip of the Iceberg.

The Takeaway

The takeaway here is a simple one. The FinTech sector is starting to heat up in Canada, where adoption has been slow, but is growing in multiples as of late. Mogo is a leader in this space with very few competitors to contend with. When comparing the company to other FinTech players in Canada and abroad, it becomes clear that the stock is highly undervalued. This clear undervaluation combined with the company’s leadership position in Canada suggests that we could see incredibly strong gains ahead.

This article was written by Joshua Rodriguez, founder of CNA Finance. View all relevant disclosures and disclaimers at CNAFinance.com.

By Joshua Rodriguez

© 2019 Copyright Joshua Rodriguez - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules