Mogo (MOGO.T) announced its intent to bump its ownership percentage in cryptocurrency exchange, Coinsquare, to 52% today, in a press release today.
Mogo will also have the option for another 3.4% increase in their Coinsquare shares from the vendors within 120 days from the closing date under similar terms. The company originally bought 5.4 million Coinsquare shares on May 13, 2021.
“Coinsquare is the leading cryptotrading platform in Canada and a highly valuable asset in the Canadian fintech [financial technology] ecosystem. They continue to perform very strongly, growing both their revenue and EBITDA [earnings before interest, taxes, depreciation and amortization] rapidly in 2021. The company generated record monthly revenue of $8.0-million in April (1) and May’s performance is expected to exceed that high mark. In addition to the financial merits of our investment, this is a great fit strategically and supports our objectives to build the most comprehensive digital wallet in Canada, including a range of investing and saving options and a free stock trading solution. By leveraging Coinsquare’s leading crypto capabilities, along with Mogo’s leading digital wallet capabilities, we are well positioned to execute on our growth plans,” said Greg Feller, president of Mogo.
Coinsquare has been around since 2014, providing digital asset traders a platform with a secure and intelligent interface for trading Bitcoin, Ethereum, Litecoin and other cryptos. It’s grown to become the pre-eminent cryptocurrency platform in Canada, and continues to grow in assets, revenue and profitability. The exchange services more than just the retail crowd. Their Coinsquare Wealth program reaches out to qualified individuals and institutions to provide customers with an over-the-counter desk with institutional grade liquidity, and other investment products.
We’ve been covering this gradual acquisition since the beginning, noting each time that this choice is a particularly timely and solid decision given Coinsquare’s excellent Q1 2021. They’re up 700% year over year to over $630 million with attendant revenue increases of over 500% from $3.15 million to an estimated $19 million.
But there’s a fair amount of uncertainty surrounding anything related to cryptocurrency right now that Bitcoin (and its attendant altcoins) are consistently losing steam due to China’s crackdown and Elon Musk’s consistent market manipulation.
Mogo and its vendors are entering into a binding term sheet on May 31, 2021, which is expected to be finished in mid-June 2021.
The three month chart shows a steady rollercoaster ride of price volatility on Mogo’s part, but it really only shows part of the story. If we were to look back to their six month chart, we see that this company hit a low of around $4. If you had bought in at its low-period, then it’s $0.35 drop today and present trading price of $9.59 price would still represent a double.
Altogether, not bad, but not as good as if you had’ve gotten out at the peak of Bitcoin’s bull run when it hit $14. There’s a fair amount of curiosity now about Bitcoin dependent companies now that the bulls have run their course, and the underlying asset’s consistently in the red week over week.
—Joseph Morton
