Novatti - The $1 party, page-2045

Check out the email I got from Emerald Finance:

Since the release of our Analyst update in September, you may have seen Novatti’s quarterly update which was highlighted by a 49% increase in sales revenue to $5.3m.

We note that Novatti’s share price has fallen from our recommended entry price but the fundamentals behind the digital payments company have not changed, and in fact have strengthened.

While it is expected that Novatti will be granted their banking licence in the coming months, the ASX had another neobank debut on Monday when Judo Bank listed after raising $657m from their IPO to list with a market cap of $2.3 billion. As part of the listing process, Judo revealed their FY21 financials which included $89.7m in revenue.

It has effectively seen Judo list with a market cap of 25x revenue.

Comparatively, our suggested entry price for Novatti was at 8.7x revenue.When factoring in the investments made in Reckon and the neobank subsidiary which are valued at $53m, the market is valuing the remainder of the business at ~4x revenue if Novatti maintains their current run rate which has them on track for $24m+ in FY22. Should Judo retain their current valuations, this bodes very well for Novatti and the upside potential of their neobank. In their latest investor update, Novatti CEO Peter Cook confirmed that they had commenced formal discussions with Reckon around offering mutually beneficial services. Given Reckon has more than 106,000 customers and Novatti has the potential to offer challenger bank services, the difference between Novatti and Judo’s valuation multiple swings us firmly in the direction of Novatti. You can view a recent report from MST Access which has a $0.86 price target on NOV shares here.

They're not wrong, the fundamentals of NOV have strengthened significantly. Just that the SP has gone nuts for some reason.