The iSignthis Ltd (ASX: ISX) share price is up an amazing 8.5x in 2019 alone from 16 cents to $1.37 today despite the payments and ID verifier posting a marginally widening loss of $729,190 on sales revenue of $7.47 million for the half-year ending June 30, 2019.
According to its latest Appendix 3B regulatory filing the company has 1.093 billion shares on issue to give it a whopping $1.42 billion market valuation.
This will leave a lot of investors asking what on earth is all the excitement about given the meagre sales.
It seems it's the group's rapid growth in gross processing transaction volume (GPTV) that is impressing investors.
Today it reported that as at August 31 2019 its GPTV exceeded A$1.1 billion, which is up more than 160% since June 30, 2019.
It also recently reported that for the quarter ending June 30, 2019 it achieved positive cash flow and EBIT.
GPTV is the volume of funds processed by iSignthis's enterprise clients from which it takes varying fees. Therefore in theory the higher the GPTV the higher iSignthis's revenues.
This is similar to a business like Afterpay Touch Group Ltd (ASX: APT) that also skims fees on every transaction or all the 'underlying sales' its retailer clients process.
Novice investors should be careful though as while GPTV numbers in the billions look impressive that doesn't always translate into much in the way of sales of profits.
Some of the excitement around iSignthis has also surged on the back of Afterpay flagging its user ID verification processes are being audited by the Australian KYC/AML regulator AUSTRAC.
iSignthis itself provides electronic or digital KYC services and it seems some retail investors have taken the wild growth of the buy-now-pay-later space as a positive for iSignthis, or even as a reason to buy shares.
Thanks to its remarkable share price rise iSignthis is also due to be added to the S&P/ASX 300 Index as at September 23, 2019, which means ASX 300 index-tracking funds will have to buy the stock when it's added.
It's possible some speculators or 'robot-style' programmatic traders are buying the stock in anticipation of this in order to make a quick profit.
Other stocks to catch a bid recently potentially for similar reasons include Audinate Group Ltd (ASX: AD8) and Polynovo Ltd (ASX: PNV).
Despite its strong growth in GPTV, I wouldn't suggest buying iSignthis shares as it seems speculators are already pricing in a huge amount of sales growth and profits down the line.
