MGI Stock Sinks as Q3 Revenue Misses Expectations

MGI stock is tanking on Friday after MoneyGram International Inc (NASDAQ:MGI) reported underwhelming Q3 results, including a loss of $7.7 million USD.

Disappointing Earnings Sink MGI Stock

The Dallas-based money transfer service reported a total revenue of $324.6 million USD, down from the $347.3 million USD reported in the same period last year. Revenue from money transfers alone fell to $284.9 million USD from $304.2 million USD in Q3 2018, while revenue from investments such as cryptocurrency firm Ripple accounted for $13.4 million USD. Crucially for MGI stock, earnings per share came in at a loss of 10 cents, which undershot the Zacks estimate consensus of 4 cents per share.

MGI stock is down over 13% following the release of the results, but there were a few highlights for shareholders to take solace in. Net loss shrunk to $7.7 million USD compared to $20.9 million USD in the same period last year, while EBITDA rose by $24.2 million USD to $44.6 million USD. The company ended the third quarter of 2019 with a cash and cash equivalents balance of $119.1 million compared to $145.5 million at the end of 2018, with MoneyGram still yet to turn profitable.

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Ripple Investment Provides Some Optimism

“Our third-quarter results reflect the continued transformation of our business as we increasingly focus on customer experience improvements, cross-border digital growth and industry-leading innovation through our strategic partnership with Ripple,” said Alex Holmes, Chairman and CEO. In June, MGI stock was the biggest gainer on the NASDAQ after cryptocurrency firm Ripple purchased a 10% stake in the company for $30 million USD.

Under the terms of the deal, Ripple will invest $50 million USD in MoneyGram International over the next two years, while the money transfer company will use the cryptocurrency XRP for transferring money worldwide. Ripple CEO Brad Garlinghouse said in a podcast this week that MoneyGram and additional clients of Ripple are contributing to a 50% boost in XRP transactions by sending dollars into Mexico using XRP as a bridge.

MGI stock is trading at $3.43 following the results, down over 40% from a September peak of $6.11.

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