The Splitit Ltd (ASX: SPT) share price popped as much as 20% this morning as punters fell over themselves to get a slice of the ‘buy now, pay later’ company following an ASX announcement.
About Splitit
Splitit offers consumers the ability to ‘split’ a payment for basic products (e.g. lemons, garbage bags and novelty share certificates). Splitit describes its service this way:
“Shoppers can split their purchases into up to 36 interest-free monthly payments using their existing Visa or Mastercard.”
In effect, Splitit’s services compete with Afterpay Touch Group Ltd (ASX: APT), Sezzle and other short-term payment apps or credit services. However, there are some small but important differences between each of the providers.
Splitit pays the merchant/retailer monthly when the consumer pays, thereby avoiding credit risk. To become a Splitit customer, consumers must have a valid credit/debit card, as this is where the payments are charged to monthly. They also offer longer repayment terms than Afterpay, with services ranging from 2 to 36 months.
I Think You’d Be Bonkers To Buy Splitit Shares
Two months ago, when Splitit shares were changing hands for around $1.27, I wrote a story here on Rask Media called Read This Before Buying Splitit Ltd (ASX:SPT) Shares. Today, shares are changing hands for just 80 cents as they’ve been steadily falling since March.
At the time I wrote the article above I questioned the company’s reporting to investors, saying:
“In a recent presentation, Splitit said its ‘addressable opportunity’ was $US4.5 trillion. That’s not a typo… To me the fact that it listed that number says more about the company’s Investor Relations strategy than its investment merits.”
In what I believe could be an attempt to save the Splitit share price from wasting away any further, the company this morning announced a deal with a Hong-Kong based payment service. You can read our coverage by clicking here.
Having read this morning’s announcement I was deeply concerned by the lack of detail. Given that Splitit’s ‘material’ new three-year ‘contract’ — which can be “terminated earlier” — sent the share price up around 20%, I would have hoped for much more colour than what was in the ASX statement.
In my opinion, I’m not sure how long term investors could read that announcement and believe Splitit’s shares are worth so much more without knowing any of the important details.
What Now?
I hope Splitit goes on to be a success and proves me wrong, but I highly doubt we’ll see its shares trading over $1.50 again anytime soon. My best guess is it’ll keep falling from here. So if this article helps even one Australian investor avoid losing money by encouraging them to stop and think before buying Splitit — it was worth it.
To be clear, I’m definitely not buying Splitit shares at this time.
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At the time of writing, Owen Raszkiewicz does not have a financial interest in any of the companies mentioned.
