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How Can Monitise plc Have So Many Top Clients And Still Be On The Sick List?

The rollercoaster ride at Monitise (LSE: MONI) continues to bounce investors from one stomach churning experience to another. If this was a theme park ride, people would be weeping for it to stop.

But the mobile banking software group isn’t a fun ride, it is a company that once held out exciting growth prospects, and investors have real money at stake.

I nearly had a lot of money at stake myself, after singling out the AIM-listed company stock as the do-or-die big money gamble I needed to flame up my portfolio.

Thankfully, I lost my nerve at the last minute. For once, who scares wins.

What Goes Down

In January, I wrote an article asking how low Monitise could go. As low as 12.5p is the answer so far, but there were signs of higher things in February, after it announced two major multi-year “multi-million-dollar” contract wins.

Its refusal to name the value of the contracts or the companies involved took some of the shine off the announcement.

And it lost even more of its gloss following last month’s embarrassing admission that it had failed to find a buyer following a strategic review.

On The Moni

But why even look for a buyer when it has such an impressive roll call of investors, partners and clients, including Santander, MasterCard, IBM, Visa Europe and RBS? Plenty of top executives believe in what Monitise has to offer, even if markets remain sceptical.

Management is now showing more belief, following the appointment of the experienced Elizabeth Buse as chief executive. She reckons Monitise can progress as a standalone company, rather than being flogged off at a fire sale valuation.

Hold On Tight

Buse admits that Monitise is still on course to lose up to £50m this year, but should turn finally a profit in 2016.

That is down to both rising revenues and “materially lower” operating and capital expenses. Hopefully, it will now stop burning through cash so quickly.

If the profits do flow next year, this should give the share price an instant boost. Otherwise investors are likely to start screaming for the ride to stop.

Times Are Changing

Many analysts have already urged investors to bail out of Monitise, before the next set of gyrations.

But partner Santander’s claim that it has an “accelerated pipeline of opportunities” does sound tempting. As does the company’s ability to pull new contract wins out of the bag, despite its publicised troubles.

This is a company in transition as it shifts to a subscription-based charging model instead of relying on upfront licence revenues. Markets may have been too harsh on it.

Trading at a fraction of its 52-week high of 72.5p, Monitise has a long way to go convince investors that it can fly again.

But at today’s price, I’m sorely tempted to take that punt again. Although I don’t plan to back it with big money this time.

I'm reserving my big money play for something that should be a little less bumpy.

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Harvey Jones 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.