Fintech stocks have been through a wild ride over the last couple of years, and few illustrate that volatility better than Mogo (TSX:MOGO). The small-cap Canadian digital finance company has swung between $1 and $5 a share in the past year, leaving investors wondering whether it’s destined to fade into obscurity or stage a comeback. With payments and wealth platforms showing real growth and a unique capital strategy built around Bitcoin, Mogo looks more interesting than many give it credit for.
What happened
Over the past year, Mogo’s results have been uneven but not without progress. Revenue slipped slightly, down 2% year over year in the most recent quarter, but profitability turned a corner. Net income came in at $13.5 million, largely thanks to gains from its WonderFi investment. Meanwhile, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $1.9 million with an 11.4% margin. It was also cash flow positive, a major milestone for a fintech that has long operated in the red. Even more importantly, payments revenue grew 23% while wealth revenue jumped 48%.
One of the biggest developments has been its push to become a fully integrated wealth and payments platform. Mogo already offers digital investing and lending, but it’s seeking regulatory approval to add crypto trading alongside equities. If granted, it would become just one of two Canadian companies able to do that under a single regulated umbrella. With 2.3 million members and assets under management hitting a record $462 million, there’s a base to build on if adoption accelerates.
The other headline-grabber is Mogo’s Bitcoin strategy. While many fintechs are still cautious about integrating crypto into their balance sheets, Mogo leaned in. Its board approved up to $50 million in Bitcoin allocations, to be funded by excess cash and the monetization of investments.
Considerations
Of course, risks remain high. The payments side of the business processed $2.8 billion in volume in the latest quarter, flat from a year ago, with Canada weighing on results. Growth came mainly from Europe, where volume rose 15%. That international angle is promising but still small compared to global payment leaders. Mogo also carries over $80 million in debt, a heavy burden for a Canadian stock with a market cap just over $50 million. While it improved liquidity with $50.8 million in cash and investments, the balance sheet limits flexibility if growth slows. And the Bitcoin reserve strategy could just as easily hurt as help, depending on crypto’s notoriously wild swings.
Still, Mogo has given shareholders reasons to pay attention. It repurchased more than half a million shares in the second quarter, showing confidence in its own stock. It also monetized part of its WonderFi position, pocketing about $14 million in proceeds. That not only bolstered liquidity but also highlighted the value of its investment portfolio, which includes stakes in names like Gemini and Hootsuite.
What makes the story intriguing is that Mogo is operating in a sector that could roar back if global payments rebound. Digital transactions remain on a long-term growth curve. With artificial-intelligence (AI) driven demand for efficient cross-border flows, companies that can innovate at scale stand to benefit. If Mogo can keep growing wealth and payments revenue at a double-digit pace while managing costs, its small-cap status means any positive shift could move the stock sharply higher.
Bottom line
At around $2.39 per share, Mogo has already rallied more than 30% over the past year. Yet it’s still a fraction of where it traded during the last fintech boom. The fundamentals are better today than they were then, with positive cash flow, profitability, and an expanding platform.
The question is whether the market will reward that progress. If digital payments strengthen globally and Mogo secures approval for crypto trading, the upside could be far greater than its current valuation suggests. For investors willing to stomach volatility, this small-cap fintech might just be one of the more compelling high-risk, high-reward plays on the TSX.