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Spenda Limited (ASX:SPX) shares fell -8.33% on Thursday as the microcap fintech company released its latest quarterly.
If you were looking for why, exactly, shares are down – you only need consult HotCopper users’ commentary in the relevant announcement thread.
First let’s talk results.
Cash receipts from customers increased 157% YoY to $1.92M – but only 6% QoQ. Right after acknowledging this, the company pointed to expected growth to come from two recent acquisitions – Limepay and SwiftStatement.
The company ended the September quarter with $6.5M, enough to last it six quarters per the company’s own assessment. That’s down around 33% from the June quarter, though, the company excluded a $1.6M R&D rebate.
Two key metrics – a 33% decline in cash, and revenue growth of 6% QoQ – is where the trouble has appeared to start.
Management and commenters disparate
“In the past quarter, our focus has been on the effective execution of our record pipeline of work across all partnerships,” Spenda’s Corporate Development chief Francis deSouza said.
“Despite ongoing resource constraints, I am pleased to report that all programs remain on track.”
What exactly those constraints are wasn’t entirely forthcoming in management commentary – nor anywhere else in the quarterly.
But if you start reading HotCopper users’ comments, the reaction to the results struck quite a different tone to that from management.
Poweruser not happy
“Wheres the [gushing] revenue as promised by the Faithers and Pumpers? Revenue barely moved up, as predicted,” user ExtremeLand wrote.
“The expectation was we would be seeing above 50% growth here considering the rhetoric from management. Clearly Carpet Court isn’t doing that well,” the same user later added. (Worth noting, this one user comments on SPX threads a lot.)
Carpet Court relates to a somewhat recent deal inked by Spenda which saw its fintech services rolled out at Carpet Court stores – which, given the name, I’m sure doesn’t need elaboration.
In a cost of living crisis, it’s questionable whether people are worried about carpets, to be fair. But in Spenda’s defence, not all users agreed with ExtremeLand.
Not all agree
“I dont think anyone was pumping here. We just believed the quarterly would have been better… [Technical Analysis] was saying it’s a buy,”user HotInvestor retorted.
But there are questions you could as about that claim: First and foremost, Spenda shares are fairly illiquid and in that context technical analysis doesn’t work.
Spenda’s 8% drop on Thursday came on only $124K worth of shares being traded; the 3W average volume is 3.4M shares per day. But the company has 4.6B shares on issue – a hallmark signal of a company that’s raised its way into a ditch.
“[Results] can’t be that bad… hardly any selling volume!,” user Exmouth1987 wrote, perhaps not intending to prove this finance journalist’s point.
But that low selling volume goes both ways, too – and it was enough to see shares fall 8% on Thursday. (Interestingly, like ExtremeLand, Exmouth1987 is also a SPX poweruser.)
Past success not an indicator
This is where historical context becomes important.
Spenda was, like most fintech stocks, a beneficiary of the COVID era where many investors banked big on a world where people wouldn’t want to exchange physical cash.
Shares hit a high of 11.5cps in February 2021, but it wouldn’t be long lived. A year later they were worth 5cps, and have hovered around 1cps since June 2022.
It is perhaps fair to say more battle hardened day traders probably would have ditched the stock a while ago and put it on a backburner – but that’s easy to say when you haven’t made an investment that went sour, and when you aren’t the one trying to break even.
SPX last traded at 1.1cps.
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