The Motley Fool

GetSwift Ltd (ASX:GSW) shares are falling as revenues fail to impress

Shares in software business GetSwift Ltd (ASX: GSW) are down 7% to 39 cents today and down around 90% from their December 2017 highs after the controversial software group provided a trading update today.

For the quarter ending June 30 2018 GetSwift reported receipts from customers of just $241,o00, although it did claim that transactions for the quarter were 1,427,358, almost double the prior corresponding quarter.

However, the feeble revenues resulted in a net operating loss of close to $4 million for the quarter, with the group blaming the rising costs on legal and governance expenses among other things.

GetSwift is currently defending itself from a proposed class action against it by shareholders out-of-pocket over allegations it mislead the market in breaching its continuous disclosure obligations.

Remarkably, the company managed to raise $75 million from investors at an issue price of $4 per share back in December 2017 after a succession of announcements to the market.

These included news over deals with Amazon. Inc. Yum Brands, and Commonwealth Bank of Australia (ASX: CBA), all of which helped its valuation rocket as punters bid the stock up, despite the lack of revenue.

This leaves it in the unusual position of having $96.7 million cash in hand, but a software-as-a-service ‘logistics management product’ that’s bringing in only around $80,000 a month. Embarassingly, GetSwift is now making nearly as much in interest on its cash hoard as it is on its software-as-a-service product.

Given its track record and the lack of revenue, GetSwift remains a stock to avoid, even though the market is now valuing it at less than its tangible cash backing. This is partly because investors feel it may face a significant legal bill over the recent problems.

If you want to invest in the software-as-a-service space I’d suggest focusing on companies actually generating revenues and operating profits. This is not rocket science and one company that comes to mind is Xero Limited (ASX: XRO).

While others like those named in the below report also offer healthy capital growth potential….

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Atlassian.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Tom Richardson owns shares of Xero and Amazon Inc.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of Xero. 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 Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.