What happened?
Tech stocks have been some of the biggest losers in the ongoing market turmoil. However, bears have shown absolutely no mercy to small-cap, loss-making tech names. One of them has been Mogo (TSX:MOGO)(NASDAQ:MOGO). The stock dropped 20% last week and is currently trading close to its 14-month lows. It traded well above $15 levels in April last year, implying a brutal 80% drop in just 10 months.
So what?
Mogo is a $200 million Canadian fintech company. It recently took up some aggressive growth strategies. However, that could not stop the stock’s downfall. Mogo launched a commission-free trading application in Canada late last year. Real-time stock quotes along with no trading fees will likely stand tall among what Canadians have now.
Furthermore, on January 11, Mogo announced an investment into an NFT trading platform NFT Trader. NFT Trader is a Canadian peer-to-peer, over-the-counter trading protocol for non-fungible tokens.
Mogo has been expanding its portfolio into digital assets and futuristic fintech solutions. It has already partnered with a cryptocurrency platform to let its users trade digital assets. Notably, it has approximately 1.8 million members and provides a Mogo digital spending account.
However, the recent tech turmoil did not spare Mogo. Rising Treasury yields suggest market participants’ changing risk appetite. Loss-making ventures like Mogo are perceived as risky assets, where investors move to defensives amid rising inflation.
Now what?
While Mogo’s recent strategic developments could bode well for its future growth, the stock could continue to trade haywire in the near future. Small-cap stocks like Mogo will likely have an exaggerated impact of the broad market weakness, which makes them relatively less suitable for conservative investors.
In the last 12 months, it reported total revenues of $35.3 million and a loss of $6.4 million. The MogoTrade and its recent foray into NFT trading could expand its subscriber base, and ultimately the revenue growth in the future.
Mogo’s subscriber and revenue growth will be important drivers for it in the long term. However, in the short term, rising interest rates and valuation concerns will likely continue to weigh on the stock.
