Splitit Struggles to Win Over Market with Latest Quarterly — Share Price Falls 1.89%

While the ‘BNPL’ boom hasn’t tapered off yet, the reality is that not all the players have thrived either.

Case in point is the performance of Splitit Ltd [ASX:SPT]. The US-based fintech that’s seen its shares fall dramatically over the course of 2021.

However, despite returns dipping well into the red, the fundamentals of the business are far from bad. In fact, you could even argue that sentiment has pushed this stock too far down. After all, their latest quarterly has some promising signs.

Let’s take a closer look, shall we.

Record results not enough to quell sell-off

Splitit has clearly tried to showcase that it is headed in the right direction with this morning’s quarterly update. Providing some strong figures for the Q4 period to 30 November.

Notably, merchant sales volume (MSV) has reached US$94 million for the period already. Beating out the company’s previous record with one month still left before the quarter is officially finished.

Better still, it is a 52% improvement quarter-on-quarter, and a 61% improvement year-on-year. Proving that more merchants are getting more use out of Splitit’s platform.

On top of that, it seems as though the broader Asian region is driving a lot of this growth. Because as Splitit reports, APAC and Japan accounted for US$24 million and US$20 million respectively.

A good result for the long-term prospects of this aspiring fintech.

As interim CEO John Harper comments, though, a lot of this is due to seasonal sales holidays:

It is pleasing to report record MSV growth in the fourth quarter to date. We’re only two months into the quarter and already we’ve surpassed the MSV reported for the whole of any previous quarter, with Christmas still ahead of us, which we are optimistic about.

The strong MSV performance is attributable to the successful execution by the team over the holiday shopping period, better than anticipated results from Japan, and ongoing underlying MSV growth and momentum. Capturing seasonal and launch event opportunities is important, but I’m just as pleased to see progress across the business and our efforts translating into strong fundamental MSV growth.

For these reasons, it wouldn’t surprise us if investors are worried this may be a seasonal outlier. A train of thought that is likely contributing to the falling share price today: down 1.89% at time of writing.

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What’s next for Splitit?

So, looking ahead, it is clear that Splitit need to build on this recent momentum. Not only capping off the fourth quarter with a bang, but also maintaining these strong metrics into 2022.

As for how likely that is to occur, no one really knows.

It is going to depend a lot on economic conditions and how Splitit continues its domestic and international expansion. At the very least, though, they seem to be on the right track currently.

The only concern that I would keep in mind is just how competitive the BNPL sector has become…

There are a lot of up-and-coming fintechs nowadays. Companies that have plenty of promise and plenty of hype, which can make it tricky for investors to pick out the best of the bunch.

So if you’re looking for a way to sort the trash from the treasure, check out our fintech report. A detailed overview of what the ASX has to offer from this industry and three of our top picks to capitalise on the big trends defining it.

Get your free copy of the full report, right now, right here.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

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 is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

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