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Estimating Stock Price from MarketWall

Sophic Capital’s AnalytixInsight’s MarketWall Levels the Playing Field for Retail Traders report detailed:

  • Recent industry developments, which include increased retail investor participation;
  • Increased attention by governments and regulatory bodies globally to protect retail investors’ interests;
  • AnalytixInsight’s [OTC:ATIXF, TSXV:ALY] strong positioning leveraging its machine- driven investment research to empower retail investors as they become more active investors, and;
  • MarketWall (49% owned by AnalytixInsight) developments, which include making its platform available to other financial institutions and just announced regulatory approval for MarketWall’s European online financial broker, InvestoPro.

These events should, in our view, significantly improve AnalytixInsight’s MarketWall’s positioning with retail investors, which could drive potential long-term upside in the share price of AnalytixInsight.

In this report, we highlight a range of valuation upside for AnalytixInsight’s stock driven by MarketWall.

  • Anticipation of MarketWall’s business-to-consumer (“B2C”) user growth at Intesa Sanpaolo alone could significantly benefit AnalytixInsight’s stock price from its current C$1 per share;
  • Recall, AnalytixInsight stock closed up about 17% on March 29, 2021 when the Company announced its Fintech affiliate MarketWall had received regulatory approval from CONSOB, the Italian financial markets regulator, for its European online financial broker InvestoPro;
  • As the Company’s MarketWall unit adds users and grows revenue, we estimate every 100,000 users could represent C$0.30 to C$1.20/share of value to AnalytixInsight, rising through the range as the Company attains business milestones;
  • First, we conservatively estimate every 100,000 users on the platform could provide around C$0.30/share (or around 30% upside) of value for AnalytixInsight, based on Fintech peer companies (some of which do not generate revenue from customers and spend significantly to acquire users);
  • As a more relevant exercise, since MarketWall plans to generate revenue from users, we believe AnalytixInsight stock may be valued through a different lens based on revenue by With this methodology, over four to five years, future value of roughly C$6.00/share could be realized by AnalytixInsight, which would discount back to around C$2.50/share of value today;
  • While amassing users and generating revenue could take time, AnalytixInsight has multiple options to unlock shareholder value from MarketWall via the unit’s relationship with Intesa Sanpaolo and other partners.

MarketWall Could Unlock Upside in AnalytixInsight’s Stock Soon

Anticipation of MarketWall’s B2C user growth at Intesa Sanpaolo alone could at first significantly benefit AnalytixInsight’s stock price from its current C$1 per share. Recall, AnalytixInsight stock closed up about 17% on March 29, 2021 when the Company announced its Fintech affiliate, MarketWall, has received regulatory approval from CONSOB, the Italian financial markets regulator, for its European online financial broker InvestoPro.

Beyond this initial positive investor reception, we believe investors could begin to reward AnalytixInsight stock as the MarketWall platform adds users. In this regard, we conservatively estimate every 100,000 users on the platform could provide around C$0.30/share (about 30% upside) of value for AnalytixInsight. Exhibit 1 illustrates that private Fintech companies are valued anywhere from about US$350 to US$1,500 per user. For example, using Exhibit 1’s mid-point of the $/User range (approximately US$900 or C$1,125 per user) implies every hundred thousand MarketWall users could be worth around C$100 million. If we halve the US$900 to US$450 to be conservative, every hundred thousand users could be worth about C$50 million to MarketWall, valuing AnalytixInsight’s 49% stake at around C$25 million or approximately C$0.30 per share of value to AnalytixInsight.

Exhibit 1: Fintech Companies’ Valuation Per User

Source: Company Reports

Valuing MarketWall on a per user basis could be conservative due to two important reasons. First, MarketWall plans to generate revenue from users, whereas platforms like Robinhood do not. Secondly, AnalytixInsight’s MarketWall partnership with Intesa Sanpaolo should help MarketWall progress towards similar valuation milestones without incurring corresponding marketing costs in order to acquire a large number of users.  Recall, MarketWall has already developed stock-app Investo which forms part of the Intesa Sanpaolo’s mobile banking app constellation which is used by over six million mobile customers today.

As a more relevant exercise, since MarketWall plans to generate revenue from users, we believe AnalytixInsight stock may be valued through a different lens based on revenue by investors. With this methodology, over four to five years, future value of roughly C$6.00/share could be realized by AnalytixInsight, which would discount back to around C$2.50/share of value today. If we assume MarketWall can garner at least 500,000 users in the next five years from Intesa Sanpaolo (representing less than 10% of Intesa Sanpaolo’s current total banking users) with the average user generating €25/month of revenue, the business could generate €150 million of annual revenue. At a 5x sales multiple (conservative for current Fintech stocks, which currently trade at 12x to 15x sales multiples and slightly above TD Ameritrade’s acquisition at around 4x), this business on a standalone basis could be worth €750 million (about C$1.1 billion) over a four-to-five-year time horizon. AnalytixInsight’s 49% share in MarketWall would then be valued at around about C$550 million or about C$6/share, which discounted back at a conservative 20% over five years implies a value of around C$2.50/share for AnalytixInsight today.

While amassing users and generating revenue could take time, AnalytixInsight has multiple options to unlock shareholder value represented by MarketWall and the unit’s relationship with Intesa Sanpaolo and other partners. For example, according to material posted on AnalytixInsight’s website and in the image below, the Company could initiate a formal valuation process which we suspect could highlight some of the user metrics we have alluded to in this report. Doing so would establish an appropriate valuation baseline for MarketWall and a higher implied valuation for AnalytixInsight. This value recognition could enable MarketWall to raise additional funding to accelerate global expansion and user growth, kickstarting a virtuous cycle which could lead to an eventual MarketWall spin-out or IPO.

Investors seeking to play on the Fintech, AI/ML, or retail investor growth trends should consider adding Sophic Capital client AnalytixInsight [OTC:ATIXF, TSXV:ALY] to their best microcap stocks list.

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