Mogo founder and CEO Dave Feller
Shareholders have seen returns in excess of 600 percent over the past 12 months
The stock: Bitcoin! Free stock trades! Cash back on mortgages! Local fintech Mogo (TSX:MOGO) certainly seems to be pressing all the right buttons for investors surfing the froth of the past year’s asset rally. And those who’ve held its stock during that time have definitely been rewarded, with returns in excess of 600 percent as shares rose from $1.50-ish to around $11 this week.
The drivers: As always with a startup in a hot sector, though, the excitement will fade unless those bright ideas convert into soaring sales and, somewhere along the line, profits. Lately Mogo has been leveraging its rising share price to make strategic acquisitions in a kind of positive feedback loop. This past month, it scooped up Montreal-based Moka Financial Technologies, which will give it a free stock trading platform (think Robinhood) and enlarge its user base by 40 percent; in February, it revealed that it would acquire a 20-percent stake in Coinsquare, one of several emerging cryptocurrency trading platforms. On Monday, Mogo announced that it’s offering cash back to its Rewards and bitcoin account holders who take out a new mortgage.
And no, it isn’t just throwing things at the wall to see what sticks, founder and CEO Dave Feller insists. All of these moves feed into its strategy of creating a comprehensive “digital wallet” solution for Canadians in the post-cash era. Still, the sale of part its loan business, along with COVID woes, saw Mogo’s full-year revenue decline 26 percent in 2020, to $44.2 million. You have to wonder what the endgame will be—world domination of consumer finance? Selling out to a foreign competitor? Roadkill?
Word on the street: This remains a high-risk, high-return investment, and competition in its target niches abounds—most notably Wealthsimple, the increasingly diversified wealth management platform backed by financial giant Power Corp. (TSX:POW). Still, the handful of analysts covering Mogo mostly maintain a buy rating, on the grounds that U.S. fintechs in the same space are trading at higher price-to-sales and -cash-flow multiples. Let the good times roll!
Coming and going: BuildDirect.com Technologies is going public, though not at the $1-billion-plus valuation once envisioned for the digital building supply marketplace. Having emerged from bankruptcy protection in 2018, the refinanced and refocused Vancouver startup reached an agreement March 19 for a reverse takeover of TSX Venture-listed, Westbank, B.C.-based VLCTY Capital (TSXV:VLCTY). Trading in VLCTY shares is halted pending completion and approval of the deal, expected in April.