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Here’s why the Splitit Ltd share price is going berserk this week

The Splitit Ltd (ASX: SPT) share price climbed 9% to 95 cents this afternoon and is now up 55% since the 61 cents per share it opened at on Monday when it announced a deal with US online shopping giant Shopify Inc. (SHOP).

This is potentially material news for the buy-now-pay-later business as Shopify already has 800,000 SME retailers signed up to its online shopping platform. For anyone who’s been camping out in Woop Woop for the last couple of years Shopify is probably the most successful cloud-based software-as-a-service platform in history as small business retailers love its software. 

For example if you make homemade jewellery, t-shirts, or pretty much anything, anywhere, you can use the Shopify software to create an internet platform for consumers to browse and pay for your goods online.

Given the rise of e-commerce globally and living-room-based entrepreneurs it’s no surprise a market leader like Shopify has gone gangbusters. 

This is important as even if Splitit has competition on the Shopify platform to provide buy-now-pay-later or other payment services Shopify is growing at strong rates off a large base to also expand Splitit’s potential market. 

As at June 30 2019 Splitit had just 509 merchants signed up to its platform, but does have one popular Australian online merchant in Kogan.com Ltd (ASX: KGN)

So far Splitit’s quarterly 4C cash flow and operational performance reports have been underwhelming, but it’s possible investors shrug off another let down towards the end of this month on the strength of the Shopify news. 

Moreover, the FOMO on the next Afterpay Touch Group Ltd (ASX: APT) is powerful. Even if UBS has dropped a bombshell on the Afterpay share price today, with a sell rating and bearish $17.25 12-month price target.

If UBS is on the money it’ll be buy-now-cry-later for today’s Afterpay investors. While Splitit investors should buckle up for a wild ride given its recent history.

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Tom Richardson owns shares of AFTERPAY T FPO.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Shopify. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd. 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.

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