Rally On, Traders!
Tech is back. Startups with systems for moving money around are leading the way. When they've got NEWS, they move even faster. The one we're spotlighting today is GreenBox POS (currently OTC:GRBX, soon NASDAQ:GRBX).
Forbes explains the payment theme well. Social media is tired. Mighty Apple is tired. Even Amazon is tired. But payment stocks like Square and PayPal . . . and GRBX . . . have plenty of room to move on their road to world domination.
Of course Square is already a $25 billion behemoth trading at 150X trailing earnings. PayPal is 4 times as large and it’s been a few years since it minted Elon Musk or Peter Thiel as bona fide billionaires.
They're "mature." It’s time the next generation of payment companies shifts into the spotlight to move money around on Wall Street . . . you know, away from tired old stocks and into the names that still have all their adventures ahead of them.
Names like GreenBox. Don’t worry if you’ve never heard of the company or can’t remember ever using its payment system. Like I said, this one is new. It’s far from a household name. But it's signing up new merchant accounts at record speeds, sometimes 100 account wins a DAY.
That’s the opportunity. This little stock is taking its first FAST steps toward creating a payment system that makes all the credit cards and all the online platforms look like cavemen moving rocks around.
One industry in particular NEEDS new payment systems. They're doing BILLIONS in sales but regulators lock them out of credit cards and normal banking. You can figure it out. It's the "green" behind the GreenBox.
Square and Paypal shrug. They don't want the headache. GreenBox has it figured out. They just signed a deal with a company, MTrac, that works with those stores. It could be the perfect combination of great tech and great connections, not to mention a huge unmet business need!
The secret is the system: so advanced it doesn’t ever have touch cash or the banking system at all. 100% secure, GreenBox can rightfully brag that there’ve been ZERO breaches and ZERO merchant cancellations so far.
That’s 100% RETENTION as well as 100% security. Nobody who has ever tried out the system has ever stepped away. They’re all still on board.
Keep that in mind while we discuss how the GreenBox works. It moves forward at viral speeds. It hasn’t moved back. The initial goal is processing $1 billion worth of transactions next year . . . aggressive for almost any other startup.
Management mentioned just a few weeks ago that enough people have signed up to join the network that the $1 billion target is ALREADY in sight. The biggest challenge now is making sure there’s enough processing power to run all the accounts.
Take a look at that press release again. On the surface, they’re celebrating the latest $50 million banking relationship. But notice how careful GreenBox is to tell us they can double the capacity to $100 million if they need it.
Does the Executive Vice President seem a tiny bit relieved that deals like this are “growing the bandwidth” fast enough to meet customer demand?
I LOVE IT when that’s the biggest worry on a young company’s radar: it’s not about finding the business, it’s about making sure you can handle the business that’s already showing up at your door.
So there’s $1 billion lining up and the GreenBox team is racing to scale up. That press release contained a “help wanted” plea! Not a bad problem to have, especially because (if I’m reading this right) average gross profit margin is 4% of transactional volume.
For one thing, that’s huge by industry standards. Visa takes 1.5% in revenue. PayPal takes 2.9%. Square takes 2.75% off every swipe. For GreenBox to capture that 4% as gross profit has everyone else literally eating their crumbs.
And for fun, stretch that margin across the $1 billion in volume GreenBox says is already lined up. That look like $40 million gross, not shabby at all for a company young enough to trade at a market cap barely 1.35X that.
That’s the opportunity I alluded to earlier! Household names like Visa and Square trade at a much bigger multiple. Even if the 4% were just revenue, consider that Visa recently traded at 15X revenue, Square was 16X and even “boring old” PayPal was 6X.
When I run those comps across GreenBox, I get some truly staggering price targets. You can do your own math but keep in mind: this is just the opening act. Getting to $1 billion is impressive. Visa runs $11 TRILLION across its platform every year.
In theory, that’s enough space to grow 11,000 times over, 1 MILLION percent growth potential if it turns out GreenBox can “disrupt” conventional payment. Tiny player, vast blue sea to swim in.
And it is a blue sea. Get realistic: PayPal and Square and Visa (and MasterCard and AmEx and even mighty Apple, which we haven’t even touched on yet) cooperate. As cash flows through their networks, each one punches its ticket.
Of course any of the giants has plenty of cash on hand to just buy out a would-be rival that starts making waves. They’re all like sharks, hungry for acquisitions in order to keep their platforms relevant and their numbers growing.
Look at PayPal, gobbling small fry sometimes at a rate of 2-3 per month. Square is playing the same game. GreenBox has
probably already come up on their M&A radar.
But while a surprise exit “too good to refuse” sweetens the story here, it really boils down to bringing the hottest financial technology on the planet (don’t take my word for it, that link is Goldman Sachs) to industries the banks can’t touch.
Read between the lines. It starts with the Point Of Sale system, the "POS" in the official GreenBox POS name. That's the “cash register” that tracks inventory, audits sales activity and streamlines customer checkout.
The system runs on the blockchain, secure and, as I mentioned, has never been hacked. (Unlike some people.) Customer data is protected and presumably compliant, saving regulatory headaches where that’s a challenge.
The QuickCard kiosk bypasses all bank-linked credit card networks as well as the problem of dealing with vast quantities of cash. (Again, not necessarily the worst problem to have.) Step into the store, tap the kiosk and you’re good to go.
Once again, the buying power live within the blockchain, literally accounted for on the “ledger.” Like Goldman Sachs says, this is high-grade computing code, practically uncrackable. All transactions are recorded. And it fits on any smartphone, which is where the wallet of tomorrow will live.
Apple might be getting jealous of that one. The Giant of Cupertino would LOVE an extra edge as it struggles to make Apple Pay happen.
There’s other bells and whistles like an integrated delivery system (useful for managing inventory as well as controlling the product at every step in its path from store to consumer), ordering systems, etc.
But you get the idea. This is the future of payment, starting with industries where payment is still pretty primitive. Perfect for that billion-dollar business shut out of the current payment networks.
What is GreenBox itself proud of? They build all their software in-house and have five patents to protect their disruptive edge. A rival truly has to buy them out in order to match what they have to offer.
Transaction volume has already climbed to $1 million a day. That’s “stealth launch” mode, really just a taste of what the platform can do. As management says, volume is DOUBLING on a week to week basis.
There’s plenty of room to grow. Management likes talking about the $116 billion global Point Of Sale opportunity. We’ve spent more time on the payment side, which might be generating $2.2 TRILLION a year soon. Either way, huge numbers for a tiny startup to grow into.
And they’re growing into the numbers at a rate of 100% a week lately. The only question mark is when Wall Street will see that math and jump. My guess? GreenBox is working on moving up to the NASDAQ.
They aim to complete the process by 2Q, so the clock is ticking. If you missed PayPal or Square, this is the place to make up for lost time. Greenbox. OTCPK:GRBX.
Happy, Happy, Happy Trading!
