Is GetSwift the Real Deal?, page-70

Investing like it’s 1999: when will the new tech bubble burst?

Like the dot-com bust of the late nineties, giddy investors are inflating Australian tech company valuations beyond what they can realistically live up to, but you won't see them complaining.
So just how legitimate are some of the tech businesses which have recently listed on the ASX? It would appear not overly.
One such ASX market darling is GetSwift, a “software as a service” company that allows businesses to optimise delivery routes and tracking, which is valued at around $564 million (down from around $800 million a few weeks ago but significantly higher than its float price of $25 million in late 2016).
GetSwift appears to be very good at building hype, giddily informing the market every time it signs a contract (whether binding or not) without ever actually specifying how much revenue (if any) will actually be derived. GetSwift was founded by Joel McDonald (a former AFL footballer) and Bane Hunter (whose resume appears to be focused around content roles at Foxtel and A&E as well as professional networking website TheLoop, which has extremely low traffic according to SimilarWeb).
The problem? GetSwift has virtually no revenue (total cash flow from operations in FY2017 was a miserly $290,301, up from $107,554). And more worryingly, industry insiders suggest that GetSwift’s technology is decidedly average. But even if GetSwift had a cutting edge platform, most venture capitalists believe that technology is not a competitive advantage in all but the most high-tech of businesses. In any event, it seems that a teenager working out of his bedroom in Tel Aviv could probably create a better tech platform than GetSwift during their summer holiday.
GetSwift’s initial public board consisted of McDonald and Hunter, along with Brett Eagle and Jamilla Gordon. None had ever been a director of an ASX listed company (unusually, Eagle and Gordon had been gifted shares currently worth almost $8 million by Hunter and McDonald). Gordan mysteriously resigned in November, without explanation, replaced by former Telstra exec Nevash Pillay, who also had also never held an ASX directorship.
What really set GetSwift’s share price alight was the announcement late last year (naturally, without any detail) of it signing a Master Services Agreement with Amazon. Whether GetSwift ever gets a cent of revenue from Amazon remains highly doubtful. This is reminiscent of 1999, where companies announcing partnerships (while reporting no revenue) received huge valuations, only to implode months later when it was realised they had no actual way of making money and lots of expenses.
A stinging investigation of GetSwift by the Australian Financial Review laid bare even more cause for concern — some of the partnerships GetSwift gloated about no longer exist, with multiple partners like Fantastic Furniture quietly dumping GetSwift’s apparent market leading technology shortly after their free trial. It appears GetSwift is far more dedicated to fulfilling its continuous disclosure obligations when the disclosures relate to good news.
But GetSwift is far from the only highly valued company on the local bourse. https://www.crikey.com.au/2018/01/24/investing-like-its-1999-are-we-creating-a-new-tech-bubble/