Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Split it Payments LTD is a payment solution for consumers that will split payments on existing debit or credit cards into monthly instalments with no interest or fees. SPT belongs to the BNPL family that are finding imminent success across Australia. Recent articles I have covered such as ZIP Co and Afterpay explain the growth of the BNPL industry in further detail, which holds importants in understanding SPT’s potential stock growth. SPT is currently priced at $0.74, which only listed February 1st this year at $0.54. The potential SPT holds is it’s variation to the BNPL industry as it directly charges your debit/credit account without the need for a middle man such as AfterPay or ZIP Co.
Potential stock growth 2020
Since Initial Offering at $0.54, SPT peaked early surging to $1.61 mid way through March only a month from listing. The price has since corrected to $0.74 which may be considered undervalued in the long run. BNPL companies have shown throughout 2019 that their share price targets cannot be underestimated. Two examples include ZIP Co gaining solid traction with investors with very solid FY reports and how AfterPay continued to show dominance in the emerging industry throughout 2018-2019.
SPT’s service can be differentiated from other BNPL companies as they take out the middle man, making the consumer experience more efficient and less complicated. This has made SPT a very promising investment opportunity as they may be able to take control of market share with their buy now pay later model.SPT’s revenue tripled in the first half of 2019, showing positive signs of growth in clients doubling to well over 200,000.
Investor confidence has been hard to measure as the price has hit all time highs and significant lows within the same year. However, the most exciting difference investors like about SPT is that it aims to target higher-end purchases, on average $1020 rather than small purchases such as Afterpay or ZIP which average $140. This means revenue every FY should grow significantly as these larger transactions get paid off.
What risks does SPT hold?
The most concerning factor with any BNPL industry is whether clients can sufficiently pay back their debt. The major concern is the questionable credit ratings on some of these BNPL accounts. In a way, we can look at the risk of BNPL industry the same way banks treated mortgage loans before the GFC. Poor regulation on clients with “questionable” credit ratings, which leads to a series of defaults on these loans which heavily effects business.
Ethically speaking, the popularity of the BNPL industry may effect the quality of life of some individuals that make purchases they generally can’t afford. My point is, with SPT they offer higher-end transactions, meaning some clients may be swindled by no interest without considering if they can actually afford these purchases in the first place. Not only does SPT hold ethical risk, it is currently non- profitable and the share price has been very volatile this year.
The Final Decision
Especially with a company within the BNPL industry, it’s essential to weigh up the risks that may effect the share price. Yes, SPT holds risk however it also holds considerable reward (opinion). At $0.74 , a bullish movement by investors would mean a very promising return at a low capital risk. SPT has an exciting product to offer in the BNPL industry however investors must be aware of the risks that this company carries.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Tyger Fitzpatrick, founder of YIG.