Southeast Asia-focused e-commerce company Society Pass Incorporated (SOPA), which is based in Carson City, Nev., made its stock market debut on Nov. 9, 2021, going public via a traditional IPO. It raised $28.13 million in gross proceeds from the offering. 

The company’s stock was recently added to the Russell 2000 index. And over the past month, the stock has gained 38.5% in price to close yesterday’s trading session at $13.74.

However, SOPA is currently trading 82.2% below its all-time $77.34 price high, which it hit on Nov. 10, due to a Reddit-fueled short squeeze. SOPA’s losses widened in the third quarter. Furthermore, ongoing labor shortages and supply chain disruption make the company’s near-term prospects look bleak.

Click here to check out our Software Industry Report

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

Top Line Growth Does Not Translate into Bottom Line Improvement

For its fiscal third quarter, ended September 30, 2021, SOPA’s total revenue surged 618.3% year-over-year to $83,534. The company’s total assets came in at $11.32 million for the period ended September 30, 2021, versus  $7.87 million for the period ended December 31, 2020. However, its gross loss widened 773.7% year-over-year to $75,902. Also, its net loss came in at $8.43 million, up 418.1% year-over-year.

Poor Profitability

In terms of trailing-12-month asset turnover ratio, SOPA’s 0.01% is 97.6% lower than the 0.47% industry average. Furthermore, the stock’s trailing-12-month gross profit margin, ROTC, and ROTA are negative compared to the 51.66%, 4.58%, and 3% respective industry averages.

Stretched Valuation

In terms of trailing-12-month P/S, SOPA’s 922.21x is significantly higher than the 1.68x industry average. And its 2,649.99x forward EV/S is significantly higher than the 2.54x industry average.

POWR Ratings Reflect Bleak Prospects

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

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

The stock has an F grade for Value, which is in sync with its higher-than-industry valuation ratios.

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

SOPA is ranked #155  of 169 stocks in the F-rated Software - Application industry.

Bottom Line

SOPA is essentially in its development stage and has yet to turn profitable. And since the stock looks overvalued at the current price level, we think 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, one might want to consider investing in the following Software - Application stocks with an A (Strong Buy) rating: Open Text Corporation (OTEX), Progress Software Corporation (PRGS), and Commvault Systems, Inc. (CVLT).

Click here to check out our Software Industry Report

SOPA shares were trading at $12.96 per share on Thursday morning, down $0.78 (-5.68%). Year-to-date, SOPA has declined -73.17%, versus a 29.59% rise in the benchmark S&P 500 index during the same period.

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...