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Why MoneyGram Stock Got Demolished Today

By Evan Niu, CFA - Updated Feb 23, 2021 at 9:20AM

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The financial payments company reports fourth-quarter results.

What happened

Shares of MoneyGram International (MGI -0.57%) have gotten demolished today, down by 25% as of 11:30 a.m. EST, after the company reported fourth-quarter earnings. MoneyGram had postponed the release due to the severe weather conditions and related power outages in Texas, where it is headquartered.

So what

Revenue in the fourth quarter was $323.3 million, below the consensus estimate of $326.7 million. That resulted in adjusted earnings per share of $0.12, topping the $0.07 per share in adjusted profits that Wall Street analysts were looking for. The financial services company, which specializes in peer-to-peer (P2P) digital payments across international borders, said that MoneyGram's online direct-to-consumer channel MGO saw transactions double.

Red stock chart going down

Image source: Getty Images.

"We delivered strong financial results in the fourth quarter led by record digital growth and significant outperformance on expenses," CEO Alex Holmes said in a statement. "Despite a year filled with unprecedented challenges, our dedicated employees rallied together to deliver the industry's best customer experience, rapidly accelerate digital growth, and expand key partnerships."

Now what

MoneyGram's outlook for the first quarter calls for revenue of approximately $300 million, which should result in adjusted EBITDA of roughly $50 million. That forecast is slightly better than the $298.5 million in sales that analysts are expecting.

However, investors may also be rattled that MoneyGram said it would suspend trading on Ripple due to ongoing litigation with the SEC. The securities regulator charged Ripple and certain executives in December over allegations of conducting an unregistered securities offering. MoneyGram had originally partnered with Ripple in 2019 for blockchain-based currency trading, and is not part of the SEC case. The agreement between MoneyGram and Ripple remains ongoing.

Editor's note: The language in this article has been updated to clarify that MoneyGram's partnership with Ripple remains ongoing.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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