Why did the Splitit (ASX:SPT) share price just hit its 52-week low?

Splitit has just hit its 52-week low…

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The Splitit Ltd (ASX: SPT) share price has continued its fall from grace today, losing another 3.12% at the time of writing to slide to 46 cents a share. That equals the company’s 52-week low.

So what’s gone so wrong for this former ASX high flyer?

After all, this is a company with a 52-week range of 46 cents and $1.93 a share. This means that in the space of under a year, Splitit has fallen more than 75%. That of course came after the Splitit share price rocketed more than 600% last year between March and August.

Splitit share price: good year gone bad

Well, Splitit’s recent woes seem to start with the company’s full-year earnings report for 2020 that was delivered back in February of this year. This company posted a 300% increase in gross revenues to US$8.4 million, as well as a 179% rise in Merchant Sales Volume (MSV) to US$246 million. However, it also widened its losses to US$25.47 million after posting a loss of US$21.47 million the previous year.

Splitit shares fell heavily as a result (4% on the day) and kept on falling.

By the time that Splitit updated the markets with a fourth quarter report in April, the shares were down almost 30%. And this quarterly report didn’t help Splitit either. The company told investors that it’s quarter-on-quarter revenues and MSV had actually fallen. In the week following the release of this report, the company gave up another 13% of its value.

There was a similar reaction to Splitit’s July quarterly update too.

Boost from Afterpay’s Square deal fades

The blockbuster announcement that Splitit’s fellow buy now, pay later (BNPL) provider Afterpay Ltd (ASX: APT) would be acquired by the US payments giant Square Inc (NYSE: SQ) earlier this month gave the Splitit share price a bit of a boost though.

Between 30 July (the last trading day before the announcement) and 4 August, Splitit shares rose a whopping 40% to 64 cents a share. This was probably on the back of hopes that Splitit itself might be a future M&A target. However, the weeks since seem to have dimmed that hope. Since 4 August, the Splitit share price has given up close to 30%.

And that brings us to today, as Splitit shares hit their 52-week low.

Who knows what the future might hold for this now embattled BNPL company. Perhaps we will have to wait until the company’s annual general meeting on 15 October to get another meaningful update as to how the company is faring.

At the current Splitit share price of 46 cents a share, the company has a market capitalisation of $223.77 million.

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Motley Fool contributor Sebastian Bowen owns shares of Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. 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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