MICT Stock Pops On Magpie Trading Platform Funding

MICT Inc (NASDAQ: MICT) is headed for the top yet again this morning following up on the strong run the stock has seen in recent sessions. As investors patiently await the launch of the company’s trading platform under the Magpie brand, news broke this morning suggesting the launch will happen sooner rather than later. Here’s what’s going on:

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MICT Announces Magpie Funding

In a press release issued early this morning, MICT said that its Board of Directors has approved a $60 million capital injection from the company into its wholly owned subsidiary, Magpie Securities. Magpie developed, and will operate the company’s trading platform in Hong Kong. 

In the release, the company said the funding will happen in two tranches, the first being $30 million in the form of equity capital. Then, upon Hong Kong Securities and Futures Commission approval, the second tranche of $30 million will go to Magpie by way of intercompany subordinated loan. 

Management Commentary

In a statement, Darren Mercer, CEO at MICT, had the following to offer:

With the upcoming launch of our mobile stock trading app, the $60 million investment in Magpie will properly capitalize the business to support our ambitious growth plans and provide the ability to offer competitive margin and IPO funding for our underlying customers. 

This Is A Big Deal

The news release today was overwhelmingly positive. Keep in mind, there are three key factors that must take place for the trading platform to launch, and with the news today, it seems like they’re all coming together. 

First and foremost, MICT needed the Hong Kong license, which it has been granted. Moreover, the company needed a working platform that provides a better experience than the few options that are already available, and with testing continuing, it seems as though that’s falling into place as well. Finally, in order for Magpie to operate efficiently, it needs capital. After all, there has to be funding for margin loans. With the announcement today, the funding is now in place. 

So, what does all this mean?

The company is on track to deliver a trading platform launch very soon, a move that will likely result in significant growth in revenue and profitability. 

This Undervaluation Won’t Last Forever

There’s no question that MICT is undervalued. Just take a look at comparable company valuations:

  • Futu Holdings (NASDAQ: FUTU). The only other competitor that actually has the Hong Kong license and operates its own trading platform in the region is Futu. That company is valued at more than $22 billion. 
  • Up Fintech Holdings (NASDAQ: TIGR). Up Fintech failed to obtain the Hong Kong license, but operates on a New Zealand license, and with partners that share in profits and data access, instead of using its own platform, it operates a white-labeled solution. Nonetheless, the company trades with a market cap of nearly $4 billion. 
  • Snowball. Snowball is expected to uplist any time now with an IPO price north of $5 billion. Interestingly, the company doesn’t operate in the same way the two above do, nor will it be a direct competitor to Magpie as it serves Chinese clients in America. 
  • Webull. Finally, Webull recently completed a private fund raise at $10 billion for its Hong Kong platform. 

At the moment, these are the only four competitors to MICT in the space, and they’re all trading with valuations in the billions of dollars. Moreover, the closest competitor, FUTU, trades with a valuation in the tens of billions of dollars. MICT, on the other hand, trades with a market cap of around a quarter billion dollars even though it has its own proprietary trading platform, its own Hong Kong license, and a stellar balance sheet that will allow it to launch, and operate for some time to come, without a hitch. If that’s not a clear undervaluation, I don’t know what is!

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The Bottom Line

The bottom line here is that MICT is executing, and executing well. The company outlined a plan to bring the mobile trading platform to market by late June, or early July, and from the news released today it’s clear that the company is well on track to reach this goal. Moreover, with a significant undervaluation the opportunity here is hard to ignore. All in all, if you’re not watching MICT yet, you’re missing out. 

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CNA Finance is not an investment advisor or broker/dealer. This article is for informational and entertainment purposes and does not constitute a recommendation to buy or sell any security. CNA Finance has a monetary relationship with MICT. Trading in penny stocks can result in significant losses.