Boku (LSE:BOKU), from the FTSE AIM 100 Index, has had a horrid time of late. The stock’s plummeted 53% year to date, with 33% of that coming in just the past month.
As I write, it’s down at 99p per share.
The culprit for the latest landslide was a trading update on 8 July. In this, the mobile payments company guided for lower full-year revenue and profits (never a good combo).
Despite this, Canaccord Genuity immediately came out and gave Boku a new 263p price target. While that was below its previous 324p projection, it’s still 165% above the current share price.
Then Berenberg Bank chipped in with a 200p price target. Again, that would represent a doubling from this point. So is Boku stock worth a look at 99p?
What is Boku?
For those unfamiliar, £292m-cap Boku helps unbanked people around the world pay for goods and services with their phone. That could be through their mobile bill (direct carrier billing) or preferred local payment methods (LPMs).
Boku’s bread & butter operation is helping Western brands such as Netflix, Spotify, Google, Meta, and Fortnite seamlessly sign up paying customers in Southeast Asia, Africa and Latin America.
Revenue more than doubled between 2022 and 2025, from $63.8m to $129m. And the company’s been consistently profitable since 2021.
What’s gone wrong?
The last time I highlighted this stock in June, I warned that risks to growth included “stiff competition in local payments and potential adverse regulatory change in its markets. Also, the loss of a big merchant like Spotify would be a body blow“.
Essentially, this is what’s happened, as revealed in the company’s trading update for the six months to 30 June:
- Competition: an unknown “key merchant” is dual-sourcing customers in Thailand, eating into Boku’s payments volume.
- Regulatory risk: two direct carrier billing connections were suspended by local authorities in one market.
- Delays to the launch of several new connections.
Due to these headwinds, Boku lowered full-year revenue guidance to $135m-$142m, and adjusted EBITDA to around $38m-$42m. Previously, the market was expecting $155m and $49.9m respectively.
Why are analysts still bullish then?
Obviously slowing growth adds risk here, as would any more adverse regulation in local markets. However, it’s not all doom and gloom. In the first half, total payment volume grew 12% to around $8.3bn, driving revenue up 11% to $66.5m.
Boku also processed its first transactions on PIX in Brazil and UPI in India. These are the national instant payment systems. Additionally, the dual-sourcing merchant is soon launching in several new markets, which is expected to more than offset the lost volume in Thailand.
Most significantly, the firm has signed a “landmark” partnership with fintech giant Stripe. Now thousands of Stripe’s existing global merchants can plug into Boku’s 300+ LPMs, and two have already gone live and started transacting.
Where next then? Well, it’s always worth taking analysts’ price targets with a pinch of salt. After all, they were foreseeing 300p+ for Boku in the not-too-distant future, yet here we are at 99p.
That said, the tech stock now looks very cheap compared to peers, making it a dip-buying opportunity worth exploring further.
Note, CEO Stuart Neal immediately bought £100,000 worth of shares when it crashed on 8 July. Then the CFO loaded up, spending £64,000.
Should you invest £5,000 in Boku right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Boku made the list?
Ben McPoland has no position in any of the companies mentioned.
