Society Pass Incorporated (SOPA - Get Rating) engages in acquiring and operating e-commerce platforms for consumers and merchants. The company made its stock market debut on November 9, 2021, going public via the traditional initial public offering method and raising $28.13 million in gross proceeds. The company recently acquired Pushkart.ph, expanding its Southeast Asia footprint.

The stock has lost 71% over the past three months to close today’s trading session at $2.97. In addition, it is currently trading 96% below its all-time high of $77.34, which it hit on November 10, 2021, due to the Reddit-fueled short squeeze. Moreover, ongoing labor issues and supply chain disruption make the company’s near-term prospects look bleak.

Here’s what could influence SOPA’s performance in the upcoming months:

Selling Shares

On February 11, 2022, SOPA announced closing its underwritten public offering of 3,484,845 shares of common stock and accompanying warrants to purchase up to 3,484,845 shares of common stock for aggregate gross proceeds of approximately $11.50 million. However, this dilutes the ownership percentage of existing shareholders.

Poor Profitability

In terms of the trailing-12-month asset turnover ratio, SOPA’s 0.01% is 97.5% lower than the industry average of 0.45%. Moreover, the stock’s trailing-12-month gross profit margin, ROTC, and ROTA are negative compared to the industry averages of 50.83%, 3.77%, and 3%, respectively.

Stretched Valuation

In terms of trailing-12-month P/S, SOPA’s 71.63x is significantly higher than the industry average of 1.56x. Likewise, its forward EV/S of 96.62x is significantly higher than the industry average of 2.26x.

POWR Ratings Reflect Bleak Prospects

SOPA has an overall rating of F, which equates to a Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight different categories. Out of these categories, SOPA has an F grade for Quality, in sync with its lower-than-industry profitability ratios.

The stock has an F grade for Value, in sync with its higher-than-industry valuation ratios. In addition, SOPA has a D grade for Growth. This is justified as analysts expect its EPS to remain negative in fiscal 2022.

Beyond what I have stated above, we have also given SOPA grades for Sentiment, Stability, and Momentum. Get all the SOPA ratings here.

SOPA is ranked #157 out of 162 stocks in the F-rated Software – Application industry.

Bottom Line

SOPA is currently trading below its 50-day and 200-day moving averages of $3.44 and $9.71, respectively, indicating a downtrend. Moreover, it is essentially at its development stage and is yet to turn profitable. Since the stock looks overvalued at the current price level, it is best to avoid it now.

How Does Society Pass (SOPA) Stack Up Against its Peers?

While SOPA has an overall POWR Rating of F, you might want to consider investing in the following Software – Application stocks with an A (Strong Buy) rating: Commvault Systems, Inc. (CVLT - Get Rating), SS&C Technologies Holdings, Inc. (SSNC - Get Rating), and Enghouse Systems Limited (EGHSF - Get Rating).

SOPA shares were trading at $2.97 per share on Thursday afternoon, up $0.01 (+0.34%). Year-to-date, SOPA has declined -71.47%, versus a -4.61% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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