When we look at the pre paid debit card market and its usage and compare it to credit card usage over the last five years, there is a steep contrast from the stand point that debit card usage has gone through the roof. Established players like Green Dot Corporation (NYSE: GDOT) have been reaping the benefits.Nearly 485 billion was loaded on to pre paid debit cards in 2011 and that number is expected to swell to nearly 685 billion in 2014 and by contrast Credit card usage has declined 11 straight quarters and is expected to continue to decline over the next 2 years. Usually when one thinks of debit cards, they think of a card like a store specific gift card that can only be used at that particular store or they think of the typical featureless prepaid master card/American Express debit card that is used primarily by the under banked or people unable to establish credit. I believe that the final untapped market within prepaid debit cards is in the teen demographic, and if you think about it, this demographic probably makes the most sense of all from the standpoint that Teens spend over 200 billion dollars a year on goods and services despite the fact that most teens don’t have a credit card or effective means to pay for goods and services online. To further compound the problem, parents are unwilling to allow teens to use their credit card or get them their own card because there is no real time way to monitor them and let’s face it, who wants a 14 year old carrying around the family credit card.BillMyParents, (OTCBB:BMPI) has a solution: The BillMyParents reloadable prepaid debit card that will revolutionize the space. A child is shopping online or in a store and needs to pay for something and now instead of using cash or their parent’s credit card, they can use their Bill My Parents prepaid debit card. The card has a master card logo right on the front of the card and is accepted everywhere master card is accepted. As soon as the purchase is made, the parent receives a text in real time notifying them of what the teen purchased, where they purchased it and how much they have spent. Within that text message, It gives the parent three alternatives, the parent can shut off the card if he or she feels the teen is spending irresponsibly, the parent can speed dial the teen and question the purchase or add additional funds from that text notification from any digital location. Another unique feature is the ability for multiple family members to load the same card. In addition to being a huge value added to the teen and the retailers that teens frequent, it provides ample opportunities for the parent to monitor how their teen spends money and creates ample opportunities to teach smart spending habits. The card has established itself as the most cost-feature competitive debit card in the space and just this week won Pre-paid debit card of the year at the annual debit card industry awards ceremony as well as multiple advertising marketing awards. In the last 6 months, the company has:1. Established a recognized brand as the #1 player in the teen debit card demographic and was nominated by Master card as prepaid debit card of the year and then won prepaid debit card of the year in the teen demographic and in 11 months has gone from 0 unique visitors a month to over 780,000 unique visitors a month. 2. Added a world class CEO Mike McCoy who left his position as the CEO of Wells Fargo’s consumer credit card division managing over 5000 people and 20 billion dollars in credit card balances to be the CEO of Bill My Parents. He is considered to be a titan of the card payments industry and this is tremendous validation to what the company is doing.3. Added two world class board members in Joe Proto and Rob DeSantis. . Joe sold two payment service companies for 300 million and 800 million each. Rob founded Arriba systems which is a 3 billion payment services company and was one of the first investors and board members of Linkedin. He is a self made billionaire.4. Recruited and built a strategic advisory board that includes the following. Bill Hernandez and Lewis Cohen. Bill is a 28 year veteran of the payments industry and spearheaded the global consumer card products for Citibank. Lewis is a 19 year veteran of the payment industry and also comes out of Citibank Global. As you know, strategic marketing agreements are all about relationships and these two certainly help.5. Received a million dollar brand awareness/marketing investment from master card which also included the unprecedented lending of master card’s priceless campaign that will reach over 70 million people. What I expect to happen over the next 6 months and why to expect the stock to trade significantly higher:1. BillMyParents to secure multiple celebrity endorsements from various athletes, entertainers and actors increasing their brand awareness and web traffic ten-fold. 2. The Company to pilot launch the card at various teen friendly merchants and stores3. Conservatively I expect the company to start adding customers at the rate of 3000 a day and at the rate of 1 million per year ultimately achieving significant profitability. Traditionally, the biggest movement in a companies stock is when a company goes from losing money to making money.4. I expect the company to up list their shares from the over the counter bulletin board to either the American or Nasdaq stock exchange.5. With the addition of the new board members and strategic advisory members. We expect multiple strategic partners and opportunities for channel marketing Online music, online video games, amusement parks, teen merchants, teen tour groups and sleep over camps are only a few of the potential opportunities.6. I expect the company to do a development deal with multiple Social media websites.7. I expect the company to launch a Peer to Peer viral marketing program which will incentivize teens to recruit their friends as card holders and be rewarded for doing so.1 million BillMyParents cardholders is 120 million in revenue to this company and whether you value this company on number of cardholders or as a multiple of revenue, this stock should be minimally a 5 dollar stock. The company currently trades at a 40 million dollar valuation at around 40 cents and epitomizes the saying, “tremendously undervalued”.
My $5 dollars a share price target provides a possible 12 times return to speculators from current market prices.
[Author/Analyst Ray Dirks of Ray Dirks Research has written two books,” The Great Wall Street Scandal” and “Heads You Win, Tails You Win”, published by McGraw-Hill and Bantam Books respectively. He continues to provide research to institutions and individuals, and he manages money for some individual investors.]