Canadian Fintech stock Midpoint Holdings (TSX-V:MPT) has moved from a low of 0.08 cents on June 30th, to reach two consecutive all-time highs the past two trading days, touching 0.26 cents since being profiled by small-cap newsletter MoneyTrendAlert.com which covers money moves and trends in small cap stocks. The newsletter features stocks that fall under a pattern whereby certain industries are seeing capital inflows. An example of one of those industries is FinTech “Financial Technology” and Midpoint is a company the newsletter believes is way undervalued in comparison to its peers.
For most of the past two months, trading volumes were low, but an interesting story from the company’s first quarter has caught the eye of newsletter www.moneytrendalert.com, which published its report Tuesday morning. In Q1, Midpoint saved a new client between $80,000-100,000 on a $40,000,000 international transfer compared to the client’s bank, while Midpoint earned $20,000 on the transaction. Money Trend Alert claims that news of this story should attract more high net worth clients for the small Fintech company. In addition to Midpoint beginning to process balloon-sized international payments, the company is introducing a virtual Iban service which will allow it to process private placements for clients, who can save money on their wires for investments. The third catalyst listed in the Money Trend Alert report, is that Midpoint is now offering Avios points on its processed wires, earning its clients massive amounts of miles, which can be used across many airlines in Europe and worldwide. Where else can an individual earn miles on say a $1,000,000 transfer, and for how long would he or she need to use a credit card to earn those miles?
These three news items have sparked new interest in the company, spiking trade volumes to an average of 419,000 shares in the past 8 trading days, with 830,600 shares traded on the day of the newsletter release.
For anyone wondering, “Who is Midpoint, and how are they able to set prices so low,” here’s the answer: The company removes the internally-priced bid/ask spread between fiat currencies set by banks, instead exchanging currencies at the midpoint, while charging 0.3%. This creates a cost structure that is the lowest in the industry for wires that exchange fiat. Money Trend claims that for any international payment over $2,000 USD, it makes financial sense to use Midpoint.
The company is trying to leverage their cost savings model to attract more high-net worth clients, and process a higher volume of payments than the $103,000,000 payments processed in their last fiscal year. On its 3,000 clients, that equates to $133/client in revenue per client per year, more than 3X similar-sized Fintech companies. The Money Trend Alert report stated that Midpoint has gained all its clients through word of mouth, but may now have the opportunity to pursue a funded client acquisition strategy.
According to a Goldman Sachs report from 2018, there is a yearly volume of $127 trillion in business to business (B2B) transactions. Midpoint is currently valued at $11,000,000 CAD, so if the company can achieve its goal of growing its client base, and increase the number of transactions processed, then investors from the past 8 days trading who bought the stock, should be handsomely rewarded.