MOGO Update: 200% 8mth Gain

tsx microcap stocks fintech

Mogo Finance Technology (MOGO:TSX $4.05)

http://investors.mogo.ca/

My report on MOGO produced substantial gains on a Fintech (online banking and financial services) that the Canadian investment community chose to ignore. It was a dramatic turnaround story but investors were more focused on the ugly chart versus the opportunity moving forward.

For those that might still own it, here is an update from the company.

Financing Update / Growth

  • Completed a successful $15.0 million convertible debenture financing – led by Michael Wekerle and other high-profile investors
  • New capital will unlock ~$60mm of loan capital Mogo can use to grow its highly profitable loan product
  • Over the next 12-18 months the loan portfolio will grow dramatically (it was $68mm at end of Q1 2017)
  • Combined with growth in new products, Mogo is positioned to deliver strong top-line growth again and expects accelerating revenue growth beginning in the second half of 2017
  • After several quarters of flat to declining revenue, we expect this will help create excitement around the growth prospects for 2018 and beyond

Valuation

  • While Mogo was the 3rd best performing stock on the TSX YTD through May 2017, the company remains undervalued relative to peer group
  • On a 2018 basis, Mogo trades at ~2.1x net sales vs. FinTech names at an average ~3.9x and even higher for high-growth Canadian techs such as Shopify (10x)
  • Many investors and analysts believe the discount to peers will be reduced as Mogo resumes growth and confidence grows in 2018 sales estimates

Platform value

The stock has latent value based on the value of the tech platform alone. Mogo has invested ~$150 Million into platform development. Canadian Zenbanx, (mobile based savings accounts), was acquired in Feb for ~US$100 mln (estimated ~10x sales) by US online personal finance company, Social Finance (SoFi).

Insider Buying

Five insiders have spent $5.3-million picking up shares in the market over the past three months.

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While this stock was presented to subscribers near $1.25, it was also provided to the public at a very attractive valuation. That original Linkedin report is available here:

https://www.linkedin.com/pulse/fintech-mogo-27m-mcap-80m-spent-software-development-danny-deadlock