BitGold (XAU:TSXV) has taken the TSX Venture by storm the last couple weeks before settling down this week. The stock has been a roller coaster since trading first began on May 13th.
BitGold is building the world’s largest online platform for precious metals savings accounts.
- May 13th begins trading on TSX Venture exchange.
- May 22nd acquires GoldMoney for 11.16 million shares.
- May 29th arranges an $18.25 million bough deal financing at $3.65 per share.
I listened in on the BitGold conference call on the transaction with GoldMoney to hear the latest.
Here are my notes.
- BitGold’s mission is to make gold acceptable and usable again.
- BitGold needs to make a network effect which means to make a service more valuable for users. BitGold needs to gain users to get a critical mass. BitGold plans to build a network effect and has studied various businesses who have been successful in doing so. A network effect can be very powerful and a moat forms around the business which makes it harder for new entrants to penetrate.
- As of the date of the conference call (May 26th) BitGold had 5000+ signups and over $1 million in gold deposits.
- GoldMoney shareholders will be subject to a 12 month lock up period.
- GoldMoney transaction very important for trust factor with customers they have built over the last 15 years.
- GoldMoney had 21,000 accounts with over a 1 gram holding at end of April 2015.
- When building their platform Bitgold had to be careful around Gold Money (IP) patents. The two intellectual portfolios make it difficult for a competitor to enter the market.
- Integrating the two systems will lead to many efficiencies not currently realized at GoldMoney and BitGold. GoldMoney is a pioneer in the field.
- Rough estimates for EBITDA are $4-5 million in 2015 $6-7 million in 2016.
- GoldMoney operates in the US and as of yet BitGold does not. Reason for this is the laws around money services business’ not well articulated. GoldMoney is a savings platform so no payments. No guidance on US roll out for Bitcoin.
- BitGold has no storage fee while Gold Money has a storage fee, potentially room to reduce Gold Money fee. BitGold nothing changing as it is more of a self serve platform while Gold Money is more managed and offers a higher level of service.
- James Turk on why GoldMoney decided to merge BitGold technology driving factor behind the decision and the two business’ complement each other/
- So far BitGold is growing faster than originally thought, user spending is dependent on price of gold. When gold drops transactions increase.
- A survey of users show that 30% have never owned gold before, proving BitGold is bringing in new demand and increased interest to gold market.
Over the next 6-12 months the plan is to integrate the the efficiencies of the two businesses, build a mobile app, and ramp up marketing to increase the network of users.
I will be watching BitGold stock actively over the next several months and have already signed up for a BitGold account here.