Shares of money transfer specialist MoneyGram International (NASDAQ:MGI) were a hit on a down day for the broader stock market Tuesday, closing nearly 12% higher.
The catalyst was a business update in which the company revealed that its digital transactions doubled on a year-over-year basis in May; this far exceeded the 57% growth in the same metric for the company's Q1.
That 100% improvement is particularly heartening for MoneyGram, since the digital channel is the motor of its growth. In Q1, its 57% rise stood in sharp contrast to the 6% decline in its walk-in business (i.e., customers visiting its physical locations).
MoneyGram's digital business is built around the direct-to-consumer MoneyGram Online channel. Within that, most transactions (over 80% in Q1) came from mobile devices.
Although the double-digit (and now triple-digit) increases are very encouraging, it should be kept in mind that the company is still struggling from the economic fallout of the coronavirus pandemic. Due largely to this, its revenue fell by nearly 25% on a year-over-year basis in Q1, while the net loss deepened by $8 million to $21.5 million for the period.
We can expect to see more growth in MoneyGram's digital channel. The company says that over 70 of its markets around the world are now digitally enabled, meaning there's plenty of room for expansion since its total number of countries and territories exceeds 200.