WithMonitises(LSE: MONI) shares down nearly 60% year to date, even some of the companys most committed investors could be starting to question the groups prospects.
But this performance is not as bad as it looks. Indeed, year to date the widerFTSE AIM UK 50 Indexhas fallen around25%. So at least some of Monitises recent declines can be traced to wider market weakness.
However, Monitise is still a start-up business and has a long way to go before it can claim to have hit the big time. Thats whyshareholdersshould view the company as a long-term, buy and hold investment.
Actually, on this basis, over the long term Monitise has really outperformed. During the past five years the companys shares have risen 108%, compared to theFTSE AIM UK 50 Index which has only clocked up a return of 26%.
No easy task
Monitise is trying to take on the world and this will take time. The creation of a global payments network is not something that can be done overnight, or even over several years. For example, it tookVisatwo decades to become an international payments processor, even with the financial backing of theBank of Americabehind it.
Whats more, up until 2007 Visa continued to operate as a series of entities owned regionally by banks across the world. The company only became the Visa we know today after a merger during 2008.
From its roots, which can be traced back to 1958, to the companys 2008 initial public offering, it took Visa five decades to achieve global success.This 50-year transformation really shows how hard it is to develop a truly global network and it makes Monitises short life span look insignificant.
When Visa began to develop its global payments network, the company had almost no competitors. Unfortunately, the same cannot be said for Monitise as there are now hundreds, if not thousands of ways to send money around the world both on and offline, making it harder for the company to break into the market.
Nevertheless, the company has made significant progress disrupting competitors by signing agreements with several major banks, retailers and even IBM: partnerships that will prove invaluable to the company over time.
Further, these partnerships prove to both current and prospective partners that the company has something to offer. While Monitises business may be slow at present, the companys customer base is growing andwith over 30m users at present, the company must be doing something right.
The bottom line
So overall, Monitises shares may have had a bad year so far but investors should not turn their backs on the company just yet.
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.