If I were a gambling man looking for an all-or-nothing bet I would be facing a toss up between troubled insurance outsourcer Quindell and mobile money specialist Monitise (LSE: MONI) (NASDAQOTH: MONIF.US).
Quindell has been all over the financial pages for its troubles, but Monitise hasn’t drawn so much publicity.
Yet its share price has plunged from its 52-week high of 80p to around 20p today.
That is quite an astonishing collapse for a company many rated as one of the most exciting growth prospects in the UK.
It remains insanely volatile, down 8% over the last week, despite rising almost 9% on Wednesday.
Exit Visa?
If you’re looking for a recovery play, Monitise looks temptingly cheap, but you’ll still lose money if it gets cheaper still. Could that happen?
Last year’s meltdown began after Monitise shocked investors with the news that sales were slowing, targets would be missed, and further cash was required to build the company.
Some investors felt duped. Then it suffered another blow when it emerged that key investor Visa was reviewing its stake.
Going Mobile
News that strategic partners Santander, Telefonica Group and MasterCard were buying £50 million of new shares to invest in the business did little to repair the damage, nor did Virgin Money’s seven-year deal to use Monitise’s Mobile Money digital banking network.
Even the IBM tie-up has failed to soothe investors, who evidently hate nasty surprises more than they value good news, because they can’t shake off the fear that more may be on the way.
Tech Tonic
Investors who thought Monitise was a fantastic buying opportunity at 50p, 40p and 30p may be even more tempted at 20p, but also more chastened.
Management talks of turning its first profit in 2016, but what if it burns through the latest cash injection before then?
The roll-call of tech companies with great prospects that lie unmourned on the wayside is notoriously long. Monitise could join it.
On the other hand, it is now operating in 170 countries, with some massive global names on board, and mobile payments offer dramatic growth possibilities if Monitise can pull through its current troubles.
On The MONI
If you have a bit of spare cash in your portfolio and want the excitement of gambling on a potential multi-bagger, Monitise could be the one.
Quindell is up 200% in the last month, so maybe that ship has sailed. Monitise could sink, but if it swims your gamble could prove highly rewarding. I’m tempted to give it a spin.
