Mogo’s Bold Bitcoin Move: A Strategic Shift in Fintech
On July 2, 2023, Canadian fintech company Mogo made waves in the financial markets by announcing its board approved a staggering $50 million for staged Bitcoin purchases as part of a long-term treasury reserve strategy. This announcement led to an impressive 140% surge in Mogo’s share price at the Toronto Stock Exchange upon market opening. Prior to this announcement, Mogo’s shares closed at 1.74 Canadian dollars, translating to approximately $1.28 USD. However, the company’s share price soared to 4.18 Canadian dollars, equivalent to $3.08 USD, marking the largest single-day increase for Mogo since 2021. As of the latest reports, Mogo shares were trading at 3.60 Canadian dollars, which represents a remarkable 107% increase over just 24 hours.
The funding for the Bitcoin allocation will primarily come from Mogo’s surplus cash and future portfolio monetizations. This strategic move is contingent on the completion of the sale of WonderFi to Robinhood, expected in the latter half of 2025. Following this transaction, Mogo anticipates holding around $50 million in cash and investments. They plan to convert this capital into Bitcoin in multiple tranches while ensuring they have enough working capital to support their lending, wealth management, and payment sectors. This careful approach demonstrates Mogo’s commitment to maintaining liquidity while expanding their cryptocurrency initiative.
President and co-founder Greg Feller emphasized that this Bitcoin strategy builds on Mogo’s foundation in the crypto sector, which began with the launch of Canada’s first retail Bitcoin account in 2018. Mogo entered the balance sheet purchase realm in 2020, showcasing an evolving commitment to integrating Bitcoin into their financial offerings. The latest announcement signifies that Mogo is serious about expanding its cryptocurrency strategy and judiciously managing corporate capital deployment.
In a significant policy shift, Mogo will now assess all corporate capital expenditures, including mergers, product investments, and stock buybacks, against an internal Bitcoin hurdle rate. Projects anticipated to yield returns lower than Bitcoin’s long-term performance will be declined. Feller frames this measure as a "new bar for capital discipline," a structured approach designed to ensure that Mogo’s spending aligns with long-term value creation. This principle is closely tied to Mogo’s “Warren Buffett” behavioral framework, which encourages long-term focus and strategic decision-making.
Mogo is also set to integrate Bitcoin into its broader business model, dubbed the "Wealth" model. This model will comprise a mix of 60% equities and 40% Bitcoin, based on a robust $400 million asset management platform. Additionally, Mogo’s lending division will focus on collateralized Bitcoin loans, aimed at reducing borrowing costs for customers. This initiative signifies an effort to make Bitcoin accessible and practical within their financial ecosystem.
Moreover, Mogo has strategic minority stakes in notable companies, including Gemini and Hootsuite, which could be liquidated to expedite Bitcoin purchases. The firm also maintains indirect exposure to the cryptocurrency market through a 12% stake in WonderFi, the parent company of Canada’s largest independent crypto exchange. With these impactful moves, Mogo is positioning itself as a forward-thinking player in the fintech and cryptocurrency spaces, focusing on innovation, growth, and capital discipline in an ever-evolving market landscape.
