Motley Fool Australia

What’s with the Douugh (ASX:DOU) share price today?

questioning whether asx share price is a buy represented by man in red shirt scratching his head
Image source: Getty Images

Douugh Ltd (ASX: DOU) shares began trading higher in the first minutes of market open, before quickly reversing the trend. At the time of writing, the Douugh share price is trading flat at 21.5 cents.

This comes after the financial wellness app provider announced it is in the final stages of completing its Goodments acquisition.

Why the Douugh share price is in focus

The Dough share price is languishing today despite the company reporting a share sale agreement with Goodments to accelerate the launch of its Wealth Jars offering.

According to this morning’s release, Douugh has executed a binding share sale agreement to acquire the issued share capital of Goodments.

Established in 2017, Goodments is a wealth management app that allows customers to trade responsibly and ethically through a range of securities. The company operates in Australia and has over 13,000 customers on its database.

Douugh stated that the takeover of Goodments will help fast-track the rollout of its Wealth Jars feature. The new offering will allow customers to accelerate their savings goals through investing in custom-built portfolios and fractionalised single shares. The company said that, with Wealth Jars working alongside the Autopilot feature, it can justify charging a monthly subscription fee.

In addition, the new wealth offering will include retirement and superannuation services.

The terms in detail

The binding share sale agreement will entail Douugh issuing 8,211,080 ordinary shares to Goodments at a price of 18.268 cents apiece. This brings the total value to $1.5 million to fully acquire Goodments.

Pending all conditions being met, settlement is expected to occur within five business days once the terms have been satisfied.

Management commentary

Douugh founder and CEO Andy Taylor hailed the company’s progress, saying:

We’re excited about the opportunity Goodments presents to accelerate the delivery of our Wealth Jars offering, as well as generating revenue as a standalone product in the Australian market in the short-term, prior to the launch of the Douugh platform.

Douugh is deliberately focused on building a responsible investing platform for savers to grow their money over the long term. We are not looking to appeal to day traders.

What’s next?

Looking ahead, Douugh noted that once the acquisition is completed, it will ramp up the revitalisation of Goodments. This will include investing in additional marketing resources, expanding distribution channels and moving forward with key improvements on Goodments’ roadmap.

It’s projected that the changes made will boost Douugh’s margins and short-term cash flow.

Douugh share price snapshot

The Douugh share price is up over 1,100% since the company listed in October last year. Year to date, Douugh shares have also increased by around 26%. Based on the current share price, the company has a market capitalisation of around $80 million.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Related Articles…