The GetSwift Ltd (ASX: GSW) share price is up 6 cents or 13% today to 53 cents, but it's still down around 40% over the past year and down around 86% since changing hands for $3.60 on January 5 2018.
The huge fall in the share price comes after an almost unbelievable rise over the end of 2017 that was driven by the "software company" making a series of announcements that it had signed "global agreements" with the likes of the US$800 billion business Amazon. Inc., Commonwealth Bank of Australia (ASX: CBA) and Fortune Company Yum Brands.
Partly on the back of hype around these announcements GetSwift was able to raise a remarkable $75 million from institutional investors in December 2018, despite having virtually nothing in revenues in probably the oddest example of share market shenanigans I've ever seen.
As at the quarter ending December 31 2019 it had just $170,000 in cash receipts from customers and an operating quarterly cash loss of $5.8 million. However, it did have cash equivalents of $87.6 million at quarter end largely thanks to the aforementioned capital raising.
GetSwift is now the subject of a shareholder class action in relation to it making misleading statements to the market over certain contractual arrangements it made in 2017 and in failing to update the market in accordance with its continuous disclosure obligations.
As such some of the capital raising money taken in from investors on the back of its boasts could end up being paid out to aggrieved investors on the back of the same boasts.
Given the lack of revenues and management's track record it's not surprising the GetSwift trades for nothing much more than its book value of $87 million due to the cash on its balance sheet.
This is something of a sorry situation for everyone involved, although GetSwift's management still report that the business is growing strongly and to plan.
Investors interested in the software-as-a-service business would be far better off looking at companies with credible revenues, management, and potential profitability. For example the likes of Pro Medicus Limited (ASX: WTC) and Xero Limited (ASX: XRO) have gone gangbusters since listing and may have plenty more gas in the tank.
