Why Splitit has made a 490% splash since January

The share price for Israeli firm Splitit Ltd [ASX: SPT] has climbed 490% after listing on the ASX less than two months ago.

Since 29 January this year, Splitit has been bolstered by positive investor attention on the back of its apparent similarity to rival firms like Afterpay Touch Group Ltd [ASX:APT]. The company is currently worth $320 million.

At time of writing, shares are valued at $1.54 each, up 14.13%.

What’s the story behind Splitit’s sudden success?

Though it’s still early days, Splitit has seemingly consolidated its place on the ASX after their initial public offering raised $12 million for a starting cap of $54 million. The IPO attracted several high-end retailers, with many merchants coming onboard.

The number of merchants connecting to the service grew from 205–380 last year, while the total number of shoppers increased by 293%. Total transactions increased by 253% to $80.2 million.

The company experienced growth throughout key metrics, with revenue for 2018 reaching $789,920 from $260,409, up 203%. This is set against a 22% increase in operational costs.

Perhaps a significant factor in Splitit’s quick success is the appointment of Andrew Pipolo — a former veteran of Afterpay, Mastercard, and Samsung Pay — as the new leading executive for the Asia Pacific region

Splitit are now looking to improve on a global scale by ‘driving awareness and uptake of Splitit’s solution.’

Do we need another Afterpay?

Apart from the main point of difference being their attention to credit risk and payment limits for credit card purchases only, the ‘Splitit Solution’ is not fundamentally different from that of Afterpay or zipPay.

Their status as the new payment instalment service on the block has been helped by the rapid increase in merchant numbers, as well as a burgeoning perception of Splitit as a payment system for ‘higher-end, higher-value’ purchases, such as travel and high-end fashion.

Afterpay, in contrast, does not regularly see payments for products higher than US$140.

Regardless, a main concern for Splitit will be their ability to weather issues surrounding potential customer debt — something to consider as Splitit takes no liability for credit risk, which is put solely on the card company.

And while the outlook for Splitit is currently positive, the sudden surplus in these payment services will ask investors to weigh in and compare the company’s future prospects in comparison to a stalwart like Afterpay.

Regards,

Ryan Clarkson-Ledward

For Markets & Money


Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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