Lots of you seem to disagree on my 5 year timeline on this investment. Here is what I think needs to play out for Monitise to see its potential. Mobile banking has not gone mainstream as fast as many, including myself expected. However it continues to head in the right direction. It took 5 years for SmartPhones to go mainstream. It took 10 years for Netflix to go mainstream.
1) Monitise needs to pick up mid and small bank costumers especially in North America, South America and Europe. Critical that MCP helps it in this over the next 48 months.
2) Bank customers have not been as engaged with their banking apps as expected. Every year 5-10% more people will become daily mobile bank app users. In 5 years we will go from 30% penetration to 70%+ engaged users. Monitise's current bank clients have over 200 million accounts - 70% of that number will be big.
3) Retailers will be interested after app user engagement grows. Geographic targeting and discounting programs with promotions will then increase the value of the Monitise platform user.
If Monitise can't make money with its user base, then no one can in mobile banking and subscription pricing will rise.
This process will be gradual and will have its ups and downs. We have the right clients, the right management, the right partners and a consumer need that is gradually growing. Unfortunately many investors will soon become discouraged as they realize this rebound will not be as quick as they hoped for.
We don't. Calling a bottom is one of the most unrealistic things in investing. It usually happens when everyone who has been calling a bottom is tired of calling a bottom. When every previously positive analyst starts downgrading the stock with price targets that imply no forward price appreciation. When no retail investors feels like this is worth investing. When the institutional investors stop adding as they start questioning their decision. When every company release is looked at through a lens of suspicion. In my head I have called so many bottoms as my valuation calculations imply forward P/S and forward P/EV that is hard to walk away from. I have added at these pseudo-bottoms.
I have no idea if we bottomed. But I sure like the retail market suspicious attitude at seemingly positive releases, the downgrades and negative articles. I like the lower volume and seeming tired institutions with dwindling purchases. I like the reassurance I get from seeing people increasingly hooked on their phones and hooked on their money and banks scrambling to catch up to other players in payments technology.
I am glad I am tired of buying....and glad that I have time to wait and to let human ways of doing things to change....
Will people selling at 20 cents be as wrong as those buying at $1.35?
I agree. In their investor update they noted that multple banks were ready to launch on MCP. Won't take too much to get people excited again.
Well said. The stock market is a mechanism of transferring wealth from those that are impatient to those that are patient. I don't think VISA would sell at these valuations now but their whole position here is now almost symbolic at $10 million.
Agree- likely will continue to drift slowly lower until MCP announcement and MCP bank contract announced. I set aside $50k to buy the day those announcements made.
That's 22,000 new registered subs since I posted this last night. Things are not as static as you think...
Not everything has to grow as fast as Facebook users. Mobile money requires bank grade infrastructure and is complex with its differing geographic needs. Step 1 is the banks. Step 2 is the retailers. These players don't want to sit and watch big Tech control their destiny. Monitise is playing this right.
I feel better about Monitise's long-term potential today than I did when I first started buying shares about 1 year ago. We have a more focused management team with operational expertise in payments . We have a major Santander partnership. We are launching a cloud based scalable platform. We have MasterCard aligned with us working on mobile payment technology. We have IBMs Watson. What has not gone as planned is consumer uptake as expected....this will happen just will take longer than expected. These partnership pickups over the past year will show up in dollars over years not months.
Banks are overwhelmed with the new technology and are now trying to play catchup...
Anxiety has created an environment where every move is looked at under the microscope. The platform will happen. If a pilot is launched for some time then that's fine. Monitise's products have set the bar high and I would rather they do it right. People are making investment decisions based on speculation and a day of announcment or lack of it. Just remember, mobile phones were out and widely used for more than 20 years before the first iPhone. Let them do it right and deliver the best value they can to the customer and the banks. More banks will come knocking on the door for that. Retailers will follow. About 1000 people register their banking needs on the Monitise network every hour.
Barclays today drops price target to 15 pence (22 cents). Seems like an odd time given positive drivers with MCP launch, new management and insider purchases. As we know, Barclay's has played Monitise on both the long and short side. Are they 1 year too late on this move? Do they know something negative about the MCP launch? Are they looking to load up here on the long side after the price target reduction?
Mobile money will be a much slower process than most of us expected - the consumer will not change overnight. Finding the profitable formula for mobile money platforms will take trial and error and adjustments. Banks want to be a big part of this movement and they increasingly need help.
We each have our own opinions, investment horizons and risk tolerance. I would be much more frustrated if I knew I needed this money in the next year. I put alot of money into this investment in the past year (gradually) but knowing that this is 1) high risk, 2) may require 5 years + to fully play out 3) knowing that if it plays out right the reward can be huge. True that subscription model change occured almost 1 year ago but a change like this can have a 24 month + negative effect on revenue numbers. In the next 3-6 months we will see if the MCP intended effect plays out in new registered subs. This is important. I am happy with the leadership at this point, the partnerships and the theoretical long-term macroeconomic supporting factors. LONG TERM.
Did you know that Netflix is just under 20 years old and that when it was a couple years old blockbuster had an offer to purchase for $50 million and walked away? Trends and breakthroughs don't happen overnight. You need vision and an addressable need, strong institutional investors, technology partners and time. Banks are tired of being pushed aside in mobile money and they need more and more help moving forward. They want a bigger mobile presence, they want better customer engagement and they want to link in directly with retailers. There will be trip ups and doubts along the way.
Well, I have learned to not put faith in internal projections here. Even management and analysts have decided not to put faith in them anymore. We are in the early phase of an operation that is trying to hit a home run. While the stock price is down 85% from 1 year highs, don't forget what has been accomplished.
1) Leadership changes which bring expertise in global money products. Buse is a plus.
2) Santander as a close partner
3) IBM as a long-term go to market technology partner
4) MCP launch with a scalable product with more efficient implementation and lower costs
5) Analytic tools for banks to allow for targeting
6) Yaap proven as a successful model
7) Overall increased institutional holdings with sell-off
8) Insider purchases finally happening again
I have not idea if this is the bottom but while short term indicators have been negative, the long term potential and story holds. If you believe that 1) banks want to be part of the mobile money movement and 2) they will need the help of technology enablers to accomplish this successfully, then I can't see how this will remain at these valuations for very long. I don't know how much profit we will see next year but great companies struggle as they initially implement their great vision. You can view that as a time to sell and run if you don't have the time horizon or as a time to buy and hold if you do.