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Why there are downside risks to Bango's (LON:BGO) share price

22nd Mar '19 by Jack Brumby

Bango (LON:BGOoperates the Bango mobile payment platform, which enables smartphone users to make payments for digital content and media on phones and tablets.

For the six months ended 30 June 2018, Bango plc revenues increased 54% to £2.6M, but net loss increased 10% to £1.9M. A quick look at the company's StockReport shows that, while revenue has floundered, the group has been consistently loss-making for the past five years:


Unfortunately, applying the Piotroski F-Score to this small cap doesn't do much to dispell these concerns... We'll get into this later, but first a quick refresher on what the F-Score means.


The Piotroski F-Score: one indicator to rule them all?

The Piotroski F-Score is a nine-strong checklist split up into three sections, each looking at a different part of a company's financial situation. Its secret sauce is that, unlike most ratios, the F-Score looks more deeply into the direction in which a company’s financial health is moving. Keeping on top of these trends can help us stay ahead of the game.

When a stock gets beaten down it ends up in the bargain basement of the stock market. From here there are generally three outcomes. The stock either:

  • Stumbles along, zombie-like,
  • Tumbles into administration, or
  • Recovers emphatically

Stanford Finance Professor Joseph Piotroski wanted to sort the wheat from the chaff. After settling on the F-Score, he produced some astonishing results.

The F-Score really does not like Bango (LON:BGO)

Piotroski found that weak stocks with an F-Score of 1 or less are five times more likely to either go bankrupt or delist due to financial problems. 

Working through the checklist, we can see that Bango has the dubious honour of one of the few listed stocks to score 1 out of a possible 9. 


Bango's share price performance has been pretty miserable over the past year.


Unfortunately, the group's F-Score suggests that there is more likelihood of a surprise to the downside than the upside in the months ahead.

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