(Asx: SPT) | Splitit – a different Buy Now Pay Later business

Feb 7, 2021

Sector: Tecnology / Financial Services

Sentiment: Bullish

***We don’t hold this stock

The company offers cross-border payment solution enabling customers to pay for purchases with an existing débito or credit card by splitting the purchase into fez and interest-free monthly instalments, without the need for registration, application or approval. 

The company’s core value propositon is to help retailers to overcome cart abandonment which according to the company’s research is the single biggest challenge retailers face with ~70 percent of consumeis abandoning their shopping carts. The company says that the top 2 reasons for cart abandonment are price and user experience. This translates into $4.6 trillion in lost e-commerce sales each year. 

Unlike other buy-now-pay-later plans, Splitit lets shoppers use their existing credit card for the easiest most intuitive checkout. (honestly not quite sure if not other company has this type of credit card integration).

Splitit shoppers use their existing credit card to pay over time, which keeps their payments small so they keep more of their money for living. Offer online shoppers flexible pay-over-time options that will grow your business.

The Positive Key Facts 

Record quarter with Merchant Sales Volume (MSV) up 218% YoY, most likely a result of the company partnering with Mastercard last year.

Record quarter with Gross Revenue up 359% YoY.

The company has just managed to setup a 3 years revolvida line of credit, US$150M what they call “Receivables Warehouse Facility” with Goldman Sachs allowing the company to potentially reduce its higher cost funding regarding the existing short term funding facility. 

Double the size of Splitti’s existing credit facilites, supporting US and European growth.

The Self-onboarding via Stripe now make the facility available more than 100 countries.

Splitit is Different and Complementary as it chases larger ticket compared to Zip, Sezzle, afterpay, Klarna, and uses the already existing debt of the buyer unlike all these firms including Paypal and Affirm.  

The company exploit other niches such as Processional Services and Commerce  whereas the other BNPL players are more focused on Retail. 

What we like on Splitit is the value proposition in comparison to other BNPL as you can see on the illustration bellow. Higher tickets and using the already existing credit card facility to organise the payment without creating new debt.

The company continue to partner with other leading Brands.

The Techincial Perspective

✅ SP is now trading after a bullish intersection with all confirmation that SP has entered into a bullish trend.

✅ Small bouce back on SP has been rejected and buyers have got back into the long position 3 days ago.

✅ An entry now could still be able to achieve a BGS 20 Strategy target under the all times high, and provided that company has just showed great results and BNPL sector is back on the investor radar, it is likely SP could reach $1.85 BGS 20 Target soon or late.

✅ Heiken Ashi is Green showing some good momentum on higher low at last weeks market’s small sell off.

🚩 SP is currently trading 9% above SMA. We normaly prefer entering when SP is under or at same level of SMA.

Target: $1.85

Profit: 20%

Weight on the Portfolio: 10% max

BGS 20 Strategy

Stop Loss: Under SMA or at $1.31 (taking stop loss is a great way to protect capital when the market or SP crashes. However it is everyone’s discretion whether to trigger or not.

Lead Time: 1-3 Months

What to Watch: SP must keep trading above EMA.

Disclaimer: Note that although we have been investing in the Australian Stock Exchange and other markets over 10 years, anything you read within this group is NOT financial advise; it is general information only and we strong recommend to consult a financial adviser before making any investment decision that could have significative impact on your wealth*