CompoSecure Holdings Stock

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Contributor, Benzinga
December 28, 2021
$6.67
0.04[0.60%]
Last update: 4:00PM (Delayed 15-Minutes)
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Open6.610Close6.670
Vol / Avg.99.838K / 220.414KMkt Cap137.235M
Day Range6.510 - 6.71152 Wk Range4.610 - 7.900

Although the longstanding analog nature of currency-based transactions faces a profound paradigm shift, not every facet of digitalized monetary solutions will experience a hearty embrace. Undoubtedly, digital payments are quicker, exponentially more convenient and in many ways more secure. Lose your credit card, and you have recourse with the issuing financial institution. Lose your (physical) wallet, and you’ll navigate an odious creek without a paddle.

Despite the myriad advantages of digital transactions, in the end, they are merely binary constructs representing bank notes. On the other hand, physical monies have, throughout the centuries, been inextricably tied to a society’s people and culture. While they principally serve as units of wealth, issuers of currency take particular care to instill the notes and coins with a sense of identity and heritage.

Unfortunately for traditionalists, the pace of innovation implies that digitalization of money is the future. However, companies have quickly discovered that computerized manifestations can never fully replicate the satisfaction of tactility. That’s one of the central arguments that Benzinga contributor Chelsi Walker forwarded regarding the rising popularity of weighty metallic credit cards.

Subsequently, CompoSecure Holdings LLC is one of the top providers of payment cards. Additionally, its cryptocurrency-related security solutions imbue its upcoming initial public offering (IPO) with tremendous relevance.

When Is the CompoSecure IPO Date?

Despite a rip-roaring ecosystem of public market debuts, Wall Street continues to feed the beast. Entering the IPO calendar on Dec. 28, CompoSecure will be among the final series of enterprises that have introduced themselves to retail investors in 2021. Shares will trade on the Nasdaq exchange under the ticker symbol CMPO.

At the end of last year, few could have imagined that the IPO market would have skyrocketed into another planetary object orbiting within the solar system. According to a Reuters report, when the page turned on December 2020, new U.S. listings contributed to a valuation haul of $168 billion — an all-time high. But 2021 blitzed that figure, with the year on pace to well exceed $301 billion.

Even more impressive, it’s not just American investors clamoring for new issues. Per another Reuters article, global markets contributed to a record raise of $594 billion in 2021, strongly implying that irrespective of choppiness in the major financial indices, demand for fresh opportunities remains sky-high.

Still, the incredibly robust IPO backdrop presents pros and cons for anyone considering CMPO stock. On the encouraging side of the spectrum, concerns about the Federal Reserve adopting a hawkish monetary policy for 2022 and beyond — one that will almost surely see borrowing costs increase — appear not to impact the market’s appetite for new listings. With stock trading on margin at elevated levels, investors seem determined to overcome a wall of worries.

However, you must be cognizant that bull markets will continue rising until they don’t. While many equity sector advocates don’t view the Fed’s policy shift as an alarming event, keep in mind that the central bank increasing interest rates between 1928 to 1929 to curb rampant speculation led to a decline in consumer spending, contributing to the eventual Great Depression. Therefore, you can never be too confident in any one thesis.

Another substantial factor to consider before making a decision on CMPO stock is that the debut will materialize via a merger between CompoSecure and Roman DBDR Tech Acquisition Corp. (NASDAQ: DBDR), a special purpose acquisition company (SPAC). Though SPACs bring options to the table that retail investors may not otherwise enjoy, their performance post-business combination has been somewhat disappointing this year.

Unfortunately, it’s the nature of the beast. As Harvard Law School noted, SPACs or shell companies take a circuitous road to the public arena, during which time they can issue equity-diluting warrants. Once exercised, warrants have the potential to sink SPACs following completion of their business combinations.

CompoSecure Financial History

Even before the COVID-19 pandemic upturned the world, the so-called cashless revolution was already in full swing. However, add in the impact of the health crisis, and people had less incentive and desire to handle dirty currency.

What’s more, even East Asian markets — which traditionally have championed physical cash — are gradually turning to digital payment alternatives. According to the World Economic Forum, “South Korea has typically been seen as the cashless champion of Asia. According to research, only 14% of payments in South Korea involve cash.”

Additionally, Chinese consumers have rapidly adopted digitalization, with approximately 60% of total payments involving cashless transactions. The underlying nation’s robust ecosystem of financial technology (fintech) companies suggests that it will soon join South Korea’s transition, where only 14% of payments involve cash.

Only Japan remains an outlier, where only approximately 20% of transactions are cashless. However, the government set a goal of increasing this rate to about 40% by 2025. Therefore, the revolution has gone international.

But due to the binary nature of computer coding languages, digital payments lack the flair and individualism that millennials crave. But through the metallic credit cards that CompoSecure specializes in, the company allows young people to have their cake and eat it too. Unlike the plethora of plastic credit cards that dominate the retail space, metal payment cards immediately convey status and style.

Even for the demographic that is hellbent on fully embracing digitalization, CompoSecure offers an intriguing solution. As you know, cryptocurrencies enjoyed a banner year in 2021, delivering stunning returns for early speculators. Nevertheless, one of the biggest concerns about decentralized financial mechanisms is security: once hacked, your funds may be gone forever.

To help remedy this fate, CompoSecure recently released its Arculus Key card, a crypto cold storage system featuring 3-factor authentication. Through the underlying Arculus Wallet app, users can protect their crypto holdings with a biometric security system. From there, any would-be hacker must input a 6-digit PIN code in the app, along with the physical Arculus Key card, which includes an imbedded security element.

Moving forward, crypto storage security should be a huge market. According to ZDNet, across 122 attacks in 2020, affected entities suffered losses amounting to nearly $3.8 billion. Since supporting infrastructure undergirds core innovations, forward-thinking investors may want to consider CMPO stock after careful assessment of the risks.

CompoSecure Potential

Thanks to encouraging early reports that the omicron variant of COVID-19 may impose less-severe symptoms, consumers who are already tired of the nearly two years of mitigation protocols are likely to embrace various social activities. Termed retail revenge, this powerful catalyst bodes well for CMPO stock as it implies increased digital transactions within brick-and-mortar establishments.

Similarly, once the pandemic fully fades away, investors can reasonably assume a surge in international travel. Many vacationers put off their travel plans because of the crisis. With such fears moving to the background, demand for higher-profile metallic payment cards may increase.

Still, a counterpoint exists that too many credit card issuers have embraced the metallic phenomenon, thus saturating a once-unique segment with incessant and shameless plagiarism. When everybody has access to weighty payment cards, the veneer of exclusivity vanishes.

As well, metal cards have many underappreciated drawbacks. For instance, not all payment portals accept such cards due to their bulkier dimensions. Ironically, metal cards may represent security liabilities as they can easily damage paper shredders. Therefore, you must send the cards back to the issuer, which is also inconvenient.

How to Buy CompoSecure IPO (CMPO) Stock

Due to CMPO hitting the market via a SPAC-based business combination, investors must acquire shares at the open, necessitating knowing how to buy stocks. Below is a quick refresher.

Step 1: Pick a brokerage.

Since the best brokers compete on similar access levels and pricing structures, choose a platform that ideally suits your needs.

Step 2: Decide how many shares you want.

SPAC-based IPOs have proven risky throughout 2021. Therefore, choose a balanced share count to help mitigate downside.

Step 3: Choose your order type.

Before trading, learn these market concepts.

  • Bid: The buyer’s best offer for a stock.
  • Ask: The seller’s lowest acceptable price.
  • Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
  • Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
  • Market order: Market orders guarantee fulfillment but only at the current rate.
  • Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
  • Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.

Step 4: Execute your trade.

Follow these steps to execute a market order:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

CMPO Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.

CMPO Pre-IPO

Although CMPO isn’t available for pre-IPO purchase, platforms like Freedom Finance offer early access to many eagerly anticipated IPOs.

Balancing the Digital with the Analog

While the near-universal fungibility of digital payment transactions appeal to modern societies, CompoSecure integrates a tangible sense of style and high culture to the mix with its metallic payment cards. However, competitive oversaturation could negatively impact CMPO stock.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.