Mogo Inc (NASDAQ: MOGO) is making waves in the market this morning, and for good reason. The company announced that it has entered into a definitive agreement that will bring its services to the global stage. Here’s what’s going on:
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MOGO Stock Pops On Global Opportunity
In the press release, Mogo said that it has entered into a definitive agreement to acquire Carta Solutions Holding Corporation, also known as Carta Worldwide. Carta is a leader in the provision of next-gen digital payments solutions.
In the release, MOGO said that the acquisition will take place as an all-stock transaction.
Carta is a well-known player in the global fintech space, powering over 100 card programs and providing the processing technology that industry leaders like TransferWise, Sodexo, Payfare, and others depend on.
Carta was founded in 2007 and its management team has decades of experience in the payments and technology space. Today, Carta is actively serving customers in Europe, Asia, Canada, and the United States, generating about $8.5 million in revenue in 2019, over 85% of which came from markets outside of Mogo’s home market of Canada.
In a statement, David Feller, Founder and CEO at MOGO, had the following to offer:
Carta has created award-winning digital transaction processing technologies for the fast-growing market for next-generation payments programs, and we’re thrilled to add them to the Mogo platform. By using Carta’s payment processing engine, we expect to enhance Mogo’s digital wallet capabilities which includes the development of our upcoming peer-to-peer payment solution, and – when combined with our digital front-end capabilities – we see a great opportunity to power the next generation of platforms globally.
The above statement was followed up by Peter Kaju, CEO at Carta. Here’s what he had to say:
We’re excited to be combining with one of the pioneers in fintech and a leader in Canada. We see tremendous opportunity to accelerate the growth of our respective businesses by combining resources and capabilities.
This transformational transaction further enhances Mogo’s position as one of Canada’s leading fintech companies, accelerates the growth of our subscription & transaction-based revenue, and expands Mogo’s TAM into the $2.5 trillion global payments business. With the sale earlier this year of our consumer instalment loan portfolio, along with the recent launch of our MogoSpend account, referral partnerships and upcoming launch of our P2P payments platform, the Carta transaction further positions Mogo for accelerating revenue growth in 2021. In addition, as we continue to expand our platform and leadership position, we expect to evaluate additional technology and product acquisition opportunities going forward.
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This News Is Huge
The news released by Mogo this morning proved to be overwhelmingly positive. The company has proven its ability to capture an audience with compelling growth across its home region of Canada. Now, with the acquisition of Carta, the company has the opportunity to bring this leadership to the global stage.
That’s a massive opportunity.
Keep in mind, the global digital payments market is worth $2.5 trillion per year. Through this acquisition, Mogo has the opportunity to tap into that market. Keep in mind, the company currently trades with a market cap of about $61 million. So, taking even a small sliver of this massive market represents a meaningful revenue increase for the company.
Considering the company’s leadership in Canada and role as the Square Cash App of the region, and its recently announced entrance in the global stage, MOGO stock is a compelling investment. Add in the dramatic undervaluation in comparison to its peers and the real potential of an investment in the stock comes to light.
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