In morning trade the Splitit Ltd (ASX: SPT) share price has continued its slide despite the release of an annual results presentation along with its annual report.
At the time of writing the payment company's shares are down 9% to $1.05 following a selloff of U.S. tech shares on Friday evening.
What was in the announcement?
Whilst today's presentation contained no new information, the company used the opportunity to remind investors of the sizeable market opportunity that the Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) rival has globally.
For those that are not familiar with Splitit, it provides a cross-border credit card-based instalment solution to businesses and merchants across 27 countries. The service allows consumers to pay for a product using their existing credit cards but divide the total cost across as many as 36 interest-free monthly payments.
What is its market opportunity?
Its goal is to become the world's leading instalment payment solution and management believes it is well-positioned to achieve this as it is the only global card agnostic solution that is deployed at the merchant's point of sale and checkout.
If it can achieve market dominance then it could be very lucrative for the company as management estimates that the addressable opportunity within its key markets is a whopping US$4.5 trillion.
However, it certainly is a long way from generating underlying merchant transactions of this level. In FY 2018 underlying merchant transactions grew 253% to A$80.2 million. This resulted in full year revenue of just US$790,000.
It also finished the period with unique shopper numbers of just 118,000, whereas Afterpay recently announced its millionth U.S. shopper after 10 months of operating in that market.
Should you invest?
Whilst Splitit could have a bright future ahead of it, I think it may struggle in a crowded market and expect Afterpay to dominate due to its first-mover advantage.
In light of this, I would suggest investors stay clear of its shares until it has shown that it is capable of capturing a material portion of its addressable opportunity.
