If you have yet to accept that the way we will pay for products in the future is soon going to change dramatically, it is time to do so. Similarly, if you are an investor, it is wise to watch some digital wallet stocks that are focused on the shift from E-Commerce to M-Commerce.
Mobile commerce currently kicks off $230 billion in sales, with Asia representing almost half of the market. In fact, it has been forecast to reach $700B in 2017. Meanwhile 35% of mobile users have now made a purchase on their phones. Wal-Mart Stores, Inc. ($WMT) estimatesthat 40% of all visits to their site in December 2012 were from a mobile device, which rose to 60% in 2014. Bank of America predicts$120B in purchases will be made from mobile devices by European and US shoppers in 2015, with nearly all of this done with a credit card on file, or embedded in your phone for easy access. The consumer shed the fear of privacy invasion and security for ease of purchase, a trend that will continue as methods to pay expand beyond your credit card.
Digital Wallet Coming Sooner Than You Think
Many of you use Paypal, Apple, Inc. ($AAPL) ApplePay, Google, Inc. ($GOOG) Google Wallet or LoopPay, which was purchased by Samsung for $250M. With LooPay, you tell the merchant which card you will use to pay with, and then you place the LooPay device against the reader to pay instantly. Before long, the day will come when you will walk in, put items in your cart/bag, walk past the checkout register and immediately be billed for the items. This is coming, and the steps to get there, including retraining the consumer on how to pay for items, represent a growing opportunity for companies and ultimately their investors. Simply put, those who understand the nuance of this shift will make money.
One cool company to watch is NXT-ID Inc. ($NXTD), with a $2.80 80M valuation: In 2013, NXT-ID launched Wocket®, its next generation smart wallet. Designed to protect the identity of its users, it eliminates nearly all the physical cards in a wallet, without needing a smart phone or internet connection. In addition to passwords and private notes, virtually any credit, debit, membership gift or loyalty card in a wallet today can be loaded, and can only be accessed with the owner’s biometric (voice) stamp.
Someone will buy NXT-ID. The smart guys at Vista Partner’s put out a report today sending shares higher, which will bring attention to the sector at the right time. The company has flown under the radar, and has been up and down with shares trading above $4 in March 2015, followed by a sell-off to $2, but I expect prices will not see these levels for any length of time. I expect a retest of the $4 very soon, and I expect they will be purchased above $5 in 2015. The company is currently valued at $80M and is worth the same $250M Samsung paid for LoopPay for a host of different reasons. I believe the company is more than 100% undervalued at current prices.
The digital wallet is the next momentum play, and once a digital currency like Bitcoin ($BCOIN) gets a foothold, these stocks will show cloud-like sector moves, as investors seek lower priced stocks with big upside in a space that is beginning to bubble below the surface. I expect the consumer will have a digital wallet in hand in 2016, as many of you already do. The day will soon come when the only plastic you have in your pocket will be your mobile phone.
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