The One Factor Holding Back Optimal Payments Plc And Monitise Plc

Optimal Payments Plc (LON: OPAY) and Monitise Plc (LON: MONI) are being held back by poor management teams.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The mobile payments industry is one of the fastest growing sectors of the tech industry and investors are clamouring to get their hands on well-run, cash generative, mobile payment processors.

Unfortunately, Optimal Payments (LSE: OPAY) and Monitise (LSE: MONI) are not reaping the benefits of the mobile payment industry growth, for one key reason.

A key factor 

Optimal and Monitise are both being held back by their managements. For example, Monitise’s management has consistently misled shareholders and abused investor trust since coming to market. A continual stream of broken promises, dilution and missed targets have erased investor trust and management’s credibility. 

Additionally, Monitise’s key management figures have done nothing but sell their shares in the company since 2010. Alastair Lukies CEO of Monitise has sold around 17m shares in the mobile money company since 2010, but hasn’t made a single purchase.

Similarly, Lee Cameron, deputy CEO has sold around 5m shares since 2011. In total, since 2010 Monitise’s executive management team has sold a net volume of 37m shares.

Optimal’s management team has also been dumping stock at an alarming rate since 2012. Moreover, there were some serious issues raised last year, when CEO Joel Leonoff handed over 1.5m shares to Equities First Holdings LLC as part of a personal finance deal, but failed to notify shareholders of the correct deal terms. A few months after this transaction, the company’s finance chief walked out the door. 

And reading through employee reviews of the company, it’s pretty easy to see that Optimal’s management is holding the company back. “A lack of vision“, “poor middle management” and “lack of communication” are all concerns raised by employees.

Employees seem to be even more distressed by Monitise’s management. Some have openly complained that management’s poor leadership has driven the company into the ground.

Don’t give up

Nevertheless, the two companies are far from complete failures. In fact, Optimal and Monetise both have great business models and have already won over hundreds of clients and thousands of customers.

Monitise for example has built relationships with some of the biggest banks in the world, as well as corporate giants such as IBMTelefónica and MasterCard. Meanwhile, Optimal’s NETBANX has signed up over 300 merchants to its network. 

Further, Optimal is highly cash generative, has a strong balance sheet and the group’s trading updates have been nothing short of impressive. For the year ended 31 December 2014 Optimal is expecting to report revenue growth of 44% and profit after tax that is “materially ahead of expectations”.

Still, without management teams that are able to push the two companies forward, Optimal and Monitise will both continue to struggle. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »