Mogo to resume share repurchases under NASDAQ buyback program
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Insights
The announcement by Mogo Inc. regarding the resumption of share repurchases signals a strong message to the market about the company's self-assessment of its stock value. By buying back shares, the company is essentially conveying that it believes its shares are currently undervalued.
From a market research perspective, such actions can often lead to an increase in the stock price due to the reduced number of shares available in the market, which increases the earnings per share (EPS). Moreover, it's a signal to investors that the company has sufficient cash reserves and is confident in its financial health and future outlook. This can be particularly reassuring in volatile markets or when investor sentiment is low.
However, it's important to consider the opportunity cost of this capital allocation decision. The funds used for share repurchases could alternatively be used for investment in growth opportunities, R&D, or debt reduction. The effectiveness of this strategy also largely depends on the timing of the buybacks and the company's ability to accurately assess its intrinsic value.
From a financial analysis standpoint, the repurchase of 1,074,353 common shares, which represents 4.4% of Mogo's current outstanding shares, is a non-negligible move that could impact the company's balance sheet. The average repurchase price of $2.36 per share suggests the company is attempting to manage its capital structure efficiently.
The additional capacity of US$7.5MM under the program indicates that Mogo is prepared to further invest in its own equity, which could be a strategic move to consolidate ownership and potentially increase return on equity (ROE). Investors often interpret buybacks as a sign of a company's leadership confidence in the business's prospects, which can be a positive driver for the stock's performance in the short term.
Long-term implications, however, will depend on the company's ability to sustain growth and profitability. The reference to the 13% ownership in WonderFi also highlights the company's investment in the cryptocurrency exchange sector, which adds a layer of diversification to their business model but also introduces an element of risk given the volatility of crypto markets.
Company has approximately
In 2023, the Company repurchased and cancelled 474,353 common shares under its share buyback program on NASDAQ and its normal course issuer bid on the Toronto Stock Exchange at an average price of
Mogo is repurchasing common shares under the buyback program because it continues to believe that the market price of its common shares does not accurately reflect their underlying value and the repurchasing for cancellation of such common shares is intended to enhance long-term shareholder value.
“We expect to remain active with our NASDAQ buyback program given we continue to believe our shares are undervalued, especially considering the recent progress, results and growth outlook in our core business, in addition to our
About Mogo
Mogo Inc. (NASDAQ:MOGO; TSX:MOGO) is a financial technology company headquartered in
Forward-Looking Statements
This news release may contain “forward-looking statements” within the meaning of applicable securities legislation, including statements regarding future activity under the Company’s share buyback program. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at the time of preparation, are inherently subject to significant business, economic and competitive uncertainties and contingencies, and may prove to be incorrect. Forward-looking statements are typically identified by words such as "may", "will", "could", "would", "anticipate", "believe", "expect", "intend", "potential", "estimate", "budget", "scheduled", "plans", "planned", "forecasts", "goals" and similar expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual financial results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Mogo’s growth, its ability to expand into new products and markets and its expectations for its future financial performance are subject to a number of conditions, many of which are outside of Mogo’s control. For a description of the risks associated with Mogo’s business please refer to the “Risk Factors” section of Mogo’s current annual information form, which is available at www.sedarplus.com and www.sec.gov. Except as required by law, Mogo disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240321315143/en/
Craig Armitage
Investor Relations
investors@mogo.ca
US Investor Relations Contact
Lytham Partners, LLC
Ben Shamsian
shamsian@lythampartners.com
(646) 829-9701
Source: Mogo Inc.
FAQ
How many common shares did Mogo repurchase in 2023 under its buyback program?
What is the average price per share at which Mogo repurchased shares in 2023?
How many common shares has Mogo repurchased to date, including previous repurchases?
Why is Mogo repurchasing common shares under the buyback program?
What is the reason behind Mogo's decision to resume share repurchases on NASDAQ?
