Mogo Finance Technology Inc. (MOGO.TO)

MOGO is a microcap fintech company which offers a comission free stock trading app and other apps providing personal loans. MOGO has more than 2M members, $9.9B in annual payments volume and a ~13% equity stake in crypto exchange WonderFi (WNDR). It is certainley an interesting company, but the fundementals are less exciting. Revenue growth for Q2 swung positive after many quarters of declines, but losses widened. Cash flows have historically been negative but swung to a small positive in Q2. We think the business is interesting, but we want to see revenue growth reaccelerate, signs of cash flow positivity and profitability. Additionally the company has quite a bit of net debt at $78M which is significant given its market cap is only $44M. The business is interesting and it is worth watching, but the size, debt, and growth risks are all too much for us to consider it.
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Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Interesting fintech company. Trades at 7x sales. Sales growth is good but need to see positive cash flow. Has exposure to crypto and moves with it. Has made some acquisitions with a recent on in investment dealing. Unlock Premium - Try 5i Free

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. It is up 172% this year. The company is reaping the benefits of transaction volumes surging with bitcoin price. Moves with the bitcoin price. A little rich at around 10x sales. Unlock Premium - Try 5i Free

This is a way to play the millennial fintech market with a dash of crypto. The stock made its IPO at 10, then pulled back sharply. They have a platform that allows millennials (or anyone else) to get loans, mortgages, and other financial products -- now including a crypto layer. There are 10 million millennials and Mogo has 600,000 (6% of the addressable market). There is a likely tipping point at 10% of the market, so Mogo should add another 400,000 users, and they are on their way there. The company has been able to deliver top line growth, but not big earnings, which has put the stock under pressure. She recommends patience, that in a stock like this, the earnings come eventually.

A name where there was a lot of growth priced in on the IPO. The company is still growing, but not profitably yet. However, it is so oversold and we are starting to see the bounce. That is probably the end of tax loss selling and you could see a nice trade in it here.