MGI Stock Slightly Down, MoneyGram May Have Tepid Future Based on Its Market Performance

UTC by Steve Muchoki · 3 min read
MGI Stock Slightly Down, MoneyGram May Have Tepid Future Based on Its Market Performance
Photo: Depositphotos

Menwhile, MoneyGram is facing several lawsuits in the United States that may damage its future growth prospects.

The stock of global payment services company MoneyGram International Inc (NASDAQ: MGI) continued with the upward trend during Tuesday’s pre-market after opening on a positive note on Monday. MoneyGram stock was trading at around $7.11, up 1.57%, during Tuesday’s pre-market. Notably, they closed yesterday trading at $7. However, as the market opened the stock went down. At the time of writing, the stock is 1.14% down, trading at $6.92.

Meanwhile, not all investors and analysts are convinced that MoneyGram will continue with its rally come next year, particularly based on its past performance.

Apparently, the increased competition in the remittance industry has put MoneyGram under further constraints. This comes despite the company having inked notable partnerships in the recent past including with Ripple and Walmart Inc (NYSE: WMT).

Data from the company indicates it is still struggling to make profits despite the global remittances having proliferated in the past two years.

Year to date, MoneyGram’s revenues are $876.5 million. This represents a 4.6% decrease from the same period last year. The company has posted a year-to-date net loss of $15.2 million, which is a significant improvement compared to the $48.4 million loss they took in the same period last year.

MoneyGram Stock and Performance

As the world economy morphs in accordance with the ongoing coronavirus pandemic, financial institutions focused on the remittance market have significantly reduced the fees involved. As a result, most companies have experienced a strain in revenue growth.

Digital transfers, especially the cryptocurrency industry have significantly eaten away the MoneyGram revenue. This is particularly due to the advantages involved in using digital assets in remittances. Furthermore, the job loss in most developed countries has significantly reduced the cash sent to poor countries by immigrants. The complicated and uninspiring nature of the MoneyGram stocks have caused different analysts to downgrade their ratings. Whereby, Moody’s has downgraded the firm twice in the last 3 years to a B3 rating.

As the fiscal year 2020 comes to an end, MoneyGram investors will closely watch the upcoming performance to advise their portfolio management.

Notably, MoneyGram is facing several lawsuits in the United States that may damage its future growth prospects. One of its major partnerships, Ripple, is facing lawsuit cases and the SEC is likely to open a new one soon.

These lawsuit cases may make a significant portion of its investors shy away in the coming quarters.

Meanwhile, MoneyGram has welcomed a proposed law by regulators that require financial institutions to share information related to international transfers and transmittals of funds above $250, down from $3,000.

“One of the keys that we need to do in this industry is…to get a more uniform standard,” said MoneyGram Chief Executive Alexander Holmes. “It’s not going to allow the bad actors to basically shop around and avoid, say, somebody like us who is going to be able to see the totality of their transactions, and then go to companies with weaker controls that are not going to be as effective.”

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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