Splitit Payments Ltd (ASX: SPT) shares listed on the ASX in January 2019 and reached its highest point in March. Since then, it’s been on a steady decline. Will it bounce back?
About Splitit
Splitit offers consumers the ability to split the purchase price of basic products; the popular ‘buy-now-pay-later’ model that Afterpay Touch Group Ltd (ASX: APT) has so successfully implemented.
As Splitit’s website reads, “Shoppers can split their purchases into up to 36 interest-free monthly payments using their existing Visa or Mastercard.”
For a comparison of Splitit’s business model and Afterpay’s business model, see this Rask Media article.
Splitit’s Quarterly Update Didn’t Help
Only a week ago, Splitit released a quarterly update that saw the share price shoot up 25% on the day of the announcement.
At first glance that seems great. In reality, however, it was a small bump in a pretty steady fall that’s been taking place since March.
Over the last month, the share price has fallen around 11% – that’s despite the 25% climb on the day of the announcement. Since March 12th, when it reached a price of $1.62, the share price has fallen just short of 34%.
Was that time in March the high-point of the Splitit share price… or will it climb back to those levels?
A High Valuation
Splitit is currently valued at around $293 million which seems high for a business that doesn’t make a profit. While Afterpay also has a sky-high market capitalization, it has a fairly large revenue stream to support that.
Splitit is yet to make any significant amount of revenue that I think would justify the share price, and, while they’re growing, they don’t seem to have the same penetration and brand awareness that Afterpay has achieved.
So Are Splitit Shares A Buy?
I still feel Splitit shares could be overvalued given the early stage the business. The entire “buy-now-pay-later” industry is a hot-spot for investors right now, so I’m hesitant to jump in.
If Afterpay shares came down in price considerably, I’d probably feel more comfortable owning those shares because of the competitive advantage they have (brand awareness, big merchants, lots of users, etc.).
Right now, though, I’d rather stick to proven businesses that are easy to understand, like the ASX growth shares identified in the free report below.
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Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.
