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Monitise Plc Plunges As Visa Inc Assesses Its 5.5% Investment

monitiseShares in Monitise (LSE: MONI) plummeted by more than 28% in early trade on the news that US giant Visa (NYSE: V.US) is to “assess” its investment stake in the UK payment group.

Visa owns a disclosed figure of 5.5% in Monitise, initially investing in the company in 2009 by taking a 14.4% stake when the company was a much smaller business. However, today’s statement from Visa claims that this assessment is “consistent with Visa’s investment practice to seed emerging players and, over time, taper that influence as the partner company grows.”

Regardless of the outcome of the assessment, Monitise will continue its strategic alliance with Visa, though the latter has said it will be lessening its dependence on external mobile development resources. Visa’s Bill Sheedy commented:

“Visa invested in Monitise as an early thought leader with a vision of making mobile banking mainstream and extending that functionality to mobile payments. Over the past 5 years, Monitise has successfully demonstrated its leadership in the sector underscored by the company’s marquee clients, multiple network partnerships and recent agreement with IBM. Consistent with Visa’s increased investment in our in-house capabilities, and the substantial growth in Monitise, Visa is considering its options with regard to its Monitise stake.”

Monitise management reiterated its unchanged previous guidance for the full year and longer-term guidance, which was unveiled last Friday, causing the shares to drop slightly despite impressive revenue results as investors were shaken by increasing losses year on year. Joint CEO and founder Alastair Lukies stated:

“Visa Inc. has been a huge support in helping Monitise develop and grow into the world’s leading independent Mobile Money company. When Visa Inc. ‎first invested we were a company of around 80 people with revenue of less than £3m and a primary focus on mobile banking. Today, Monitise is a global, agnostic and interoperable Mobile Money network of unique scale and capability. We are honoured to have our ongoing alliance with Visa as we continue to develop and expand our global network.” 

Today’s news emphasises the importance of thoroughly researching an investment to know what you’re getting yourself into.

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Sam Robson owns shares of Monitise. 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.