Why is the Cirralto (ASX:CRO) share price up more than 3,000% in 12 months?

The Cirralto Ltd (ASX:CRO) share price has been a huge mover on the S&P/ASX All Technology Index this year, but why?

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The Cirralto Ltd (ASX: CRO) share price has been a huge mover on the S&P/ASX All Technology Index (ASX: XTX) this year, rising from just one cent to a high of over 11 cents per share.

The Cirralto share price is already in the news today and has closed down 7.3% at 6.3 cents per share after its latest investor presentation.  

Let’s take another look.

Cirralto’s ups and downs

Long-time investors may be familiar with the Cirralto story. It’s a technology investment company based in Australia, which acquires, develops and commercialises tech assets that modernise IT systems.

Data storage, migration and cloud-based computing are all key areas for the company. Its products include PoolBox, Flash Convert, Synk’d and its latest payment service, Spenda.

The company has attempted to enter the buy now, pay later (BNPL) space as a B2B offering over the past few months, which saw its share price surge and reach 12-month gains of 4,810% in March. 

Throughout this period its often seen daily gains of more than 200%, punctuated by significant weekly and monthly losses.

At its high, it raised $18 million in capital to launch Spenda in the BNPL market. After a period of work behind the scenes and share price drops, which perhaps reflected the ongoing investor uncertainty in this company, it upgraded its pay services at the beginning of May.

It was potentially seen as being late to the party after such high initial BNPL interest, and that appears to have hurt trust in the company. The company’s latest financial reports show a 25% increase in cash receipts, 12% increase in customer numbers, and 18% increase in merchant turnover.

Still, the Cirralto share price falls.

The company believes Spenda has a market advantage because it can provide payment services cheaper than most of its rivals on the market, and it has a higher level of integration with a range of existing platforms.

It’s currently tightly marketing Spenda in key areas, where it hopes to create notable efficiencies in connecting consumers, retailers and manufacturers throughout the payment process.

Foolish takeaway

Despite seemingly positive reports from the company this month, some investors clearly believe it has been overhyped. The Cirralto share price has lost 22% in the past month and has declined on 13 of the past 30 days. 

It’s easy to see why Cirralto could drive this kind of hype. It’s a company that appears to have many of the right pieces: strong sales growth, cloud-based IT systems, BNPL technology, high profile financial partnerships and a huge market capitalisation for a six-cent share.

But it’s also proven a little nerve-wracking, and some director share sell-offs in hard times create an uneasy feeling. It’s also been exceptionally volatile in a period that’s seen a boom in ASX technology shares, with no shortage of quiet achievers on the index. 

Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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