At time of writing, the share price of Splitit Payments Ltd [ASX:SPT] is down 6.09%, trading at $1.08.
It has been a remarkable 12 months for the Splitit share price, offering close to a 190% return over this period:
The latest news out of the company is the release of its annual report, which reveals strong revenue growth, but limited cash on hand.
Splitit share price down as investors reflect on outlook
It is possible that today’s movement in the Splitit share price can be put down to investors being reminded where weakness may lie in the company.
That is, while revenue from continuing operations were up 203% and gross profit up 562%, the company only has around US$309,590 in cash and cash equivalents.
Splitit currently has 380 merchants and 118,000 unique shoppers.
Meanwhile, Afterpay Touch Group Ltd [ASX:APT] has recently announced its one-millionth US customer after just 10 months in the country.
So with limited cash and a smaller customer base, there could be headwinds for Splitit to overcome.
Should you invest in Splitit?
While the company’s reported growth in merchant fees and unique shoppers is impressive, it reported gross profit of just $389,793.
These kind of figures may keep the company growing, but I believe if it really wants to experience Afterpay-esque growth, it may need to engage in capital raising to plough into its marketing budget.
The dynamics of this move will be down to the specific requirements of the company.
So if you are looking for small-cap stocks with major growth potential, I would recommend you check out Sam Volkering’s latest picks, which can be downloaded for free here.
For Money Morning