Investors in mobile money specialist Monitise (LSE: MONI) (NASDAQOTH: MONIF.US) know all about roller-coaster rides. How else to describe 2014? The share is down 55% in the last six months and nearly 10% in the last week.
There have been ups as well as downs, some flashes of hope among the dread. And I expect 2015 to be exactly the same.
Revolutionary Road
I wouldn’t even be looking at Monitise if I didn’t think it was an exciting prospect. Mobile banking, payments and commerce is a whizzy new field that could revolutionise how we handle our money.
The worry is that revolutions have a nasty habit of eating their children.
Management’s admission that sales growth would be slower than expected hit the stock hard this autumn, as did Visa’s decision to reduce its stake in the company.
Progress is likely to remain bumpy.
Going Mobile
But there was good news as well. Last week, Monitise signed a seven-year deal with Virgin Money, which will use its Mobile Money digital banking network.
More than 30 million users have already registered for its mobile technology, accounting for $88bn of payments, purchases and transfers every year.
Last month, strategic partners Santander, Telefonica Group and MasterCard agreed to buy £50 million of new shares, to help develop the company, and invest in its technology and working capital.
And Turkish Airlines announced it will use its suite of new apps for its mobile customer services.
Brand Power
To a degree, I think investors in Monitise have been given a rough ride. Bad news, such as the Visa pull-back, sends the stock careering downwards, while good news (Santander, Telefonica Group and MasterCard) has less impact.
This suggests to me that investors are edgy, despite all the big brands hopping on board.
Hold On Tight
With even big, conservative names such as Lloyds Banking Group pulling back from the high street and committing to a digital future, the sector has plenty of room to grow.
You will need strong nerves to leap on board this stock right now. It’s the type of stock that could fall 30% one day, then rise 10% the next. Worse, the company may not even turn a profit until 2016, if then. And don’t even think about getting a dividend just yet.
Broker Canaccord Genuity still has it as a buy, and its target price of 85p would see Monitise heading for triple-bagger territory.
This year’s share price plummet may have rattled nerves, but it still attracts bold new investors hoping for more ups than downs next year. Hang onto your hats.