GDOT (US Listed) - Reasons I Invested In It

This post is a reminder for myself of why I invested in the above company. I am vested and comments maybe biased.


Growing Revenue, Net Profit, Cash from Ops, with consistent FCF generated – A business taking on market share and continuously generating FCF.

No more debts – A growing business allows the company to reduce its debts. Currently it do not have any debts. Thus, there will be significant interest saving moving forward. US$6.5 million of interest expense is paid in FY2018.

DCF calculation – I have a weird way of doing DCF (high discount rate of 15% to 30%) with 0 growth based on the past 5 years of FCF. This DCF allows me to come up with a $19.77. But what happens if 1% of growth occurred and a more regular discount rate of 10% is taken into effect.
Reasonable Ratios - PE stands at 13.15 and PFCF stand at 7.94. This doesn’t shout value. But they are reasonable comparing to other Fintech out there which is still burning cash. (I compare with Fintech because GDOT main clients are deem to be fintechs – To be explained below).

Piotroski F Score – I calculated. It has an 8.

Business Model

Unique Service – From a debit/credit card business model, GDOT has evolved out with a unique service - BaaS (Banking as a service) - that allows the company to act as an escrow agent and doing more as well such as providing card services.

Co-brand Cards – This allow them to work with non-banking parties like Walmart to come up with co-branded loyalty cards.

Working on Tax payment – It seems like it is quite hard to make payment for tax in US for the corporates. Working with intut probably smoothens out the process.

Working with Apple – Yup. Apply Pay platform is managed by GDOT. Apple pay will grow bigger so will the services from GDOT to Apple users.

6 Step Plans – I always love it when management comes up with a plan to build the business. The management here seem to be following it closely and it has been producing results.


Working with Fintechs – Fintech are the next growth phase globally. Thus, they will need a company to service their backend. The company is GDOT due to their ability to be innovative and flexible with their offering. In the Q1 2019 transcript, the company has signed on numerous new partnership with fintech in the US. They are also intending to work with Monzo.

New Partners – Latest transcript stated that 253 new partners who have chosen Green Dot RapidPay for their corporate PayCard solution.


Losing Walmart Cobranding – They have a long term relationship with Walmart on a co-brand card that is expiring in May 2020. The management has refused to provide more colour on the working relationship. Losing this relationship will definitely hurt GDOT business. The share price has also react strongly to this by falling from US$50+ to the current share price.

Fintech taking over – There is a chance that Fintech, that work with GDOT, will eventually want to lose them but taking over the services themselves. However, with many fintech still making losses, the threat is small.

Blockchain – Will blockchain presents a threat to GDOT? Yes. When? In my opinion, still miles away.

Paypal/Square/Visa/Mastercard – This is the main threat in my opinion. It is very easy for them to replica what GDOT is doing. However, GDOT is trying to work with all of them one way or another. In this way, it tries its best to eliminate the competition.

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