Shares of Mogo Inc. (MOGO) rose 6.4% to close at $7.66 on June 15. The price move was driven by MOGO’s announcement that it now owns 39% of Coinsquare after it bought an additional 2% of Coinsquare's common stock in a cash and stock combination deal.
MOGO is a digital payment and financial technology company that provides simple digital solutions to members, helping them control their financial health. (See MOGO stock analysis on TipRanks)
Coinsquare is Canada’s leading cryptocurrency platform, and it continues to experience rapid growth in assets, revenue, and operating profitability. Founded in 2014, Coinsquare provides traders with a proprietary trading platform engineered to deliver a powerful, secure, and intelligent interface for trading Bitcoin, Ethereum, Litecoin, and other digital assets.
Per the terms of the deal, MOGO bought 655,644 Coinsquare shares from Michael Diamond and two affiliated companies (vendors) in exchange for 378,774 shares of MOGO as well as a cash payment of $5 million.
Furthermore, MOGO can exercise an option to snap up another 3.4% of Coinsquare shares from the vendors until October 13, subject to certain regulatory approvals.
If MOGO exercises the option and combines it with its pre-existing purchase warrant in Coinsquare, its total ownership of Coinsquare shares could increase by an incremental 14% of the total shares outstanding.
Notably, MOGO will need Coinsquare shareholders’ approval if it plans to acquire more than 49.9% of its shares.
Yesterday, BTIG analyst Mark Palmer initiated coverage on MOGO with a Buy rating and a price target of $13 (69.7% upside potential).
Palmer believes MOGO provides a great medium to invest in the digital disruption of the financial services industry in Canada and greater acceptance of bitcoin and other cryptocurrencies.
Overall, the stock has a Strong Buy consensus rating based on 5 unanimous Buys. The MOGO average analyst price target of $12.88 implies 68.2% upside potential from current levels. Shares of MOGO have jumped 554.7% over the past year.
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