Why the Getswift Ltd share price is going to get hammered today

The Getswift Ltd (ASX: GSW) share price will likely get punished today following a media article over the weekend. Fairfax media reported that Getswift may have inappropriately told the market it had won contracts when it hadn’t.

Over the past 12 months or so, Getswift announced several contracts with businesses including Fantastic Furniture, The Fruit Box, and Commonwealth Bank of Australia (ASX: CBA). According to the Australian Financial Review however, at least two of those contracts, Fantastic Furniture and Fruit Box, did not proceed past the trial stage.

As a result, Getswift may have mislead the market when it made public statements claiming that it has signed commercial 3-year contracts with Fruit Box. Getswift definitely has a deal with Commonwealth Bank, the AFR confirmed, but the application is only in the very early stages of testing:

“The GetSwift application is not yet in pilot phase, so until we are comfortable with the performance of the solution we are unable to comment any further. The update made by GetSwift to the market on 18 December was not approved by Commonwealth Bank,” according to a Commbank spokesman.

The news is likely to shock Getswift shareholders, who have watched the company sign a string of seemingly ever-larger deals with clients like N A Williams and Amazon, with the company’s share price recently touching its all-time high of $4.30.

Getswift recently raised $75 million in capital at $4 to sophisticated investors, so those who participated in the capital raising will almost certainly have some questions for the company, as will the ASX. We’ll have more coverage later today if Getswift releases an announcement.

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Motley Fool contributor Sean O'Neill has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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