Stay Away From Southeast Asian Loyalty Play Society Pass


E-commerce company Society Pass (NASDAQ:SOPA) received a rapturous welcome to the public market. SOPA stock debuted on Nov. 9 at $9 a share and closed its first day of trading up more than 400%. A day later, shares were up as much as 759%. But a week later, they began a swan dive that bottomed out in mid-December at $3.27.

a laptop displays a pair of white tennis shoes while one hand types on the laptop and another holds a credit card
Source: Shutterstock

Currently, SOPA stock is trading at $5.59 a share, or 38% below its IPO price, with a market cap of $107 million. Some of the blame goes to the market. The Nasdaq is down more than 9% since Society Pass came public. Investors’ appetite for risk has evaporated. They suddenly want earnings and even dividends rather than multiples of revenue and growth projections.

But some of it has to do with the peculiar business this Carson City, Nev.-based company is in. To start with, it’s not doing business in Nevada at all, but in Southeast Asia.

What’s Society Pass?

Society Pass, which is also known as SoPa, was founded in 2018 by Vietnamese entrepreneur Luan Thuc Nguyen, who goes by Dennis Nguyen.

The idea is to build a loyalty program among Southeast Asia’s burgeoning middle class, tied to merchant software, from a base in Ho Chi Minh City, the former Saigon. When the company came public, it was said to be the first Vietnamese company to complete an IPO outside its home market.  At the time, Nguyen said he was targeting the Philippines and Indonesia for growth.

Prime industry targets include travel, restaurants and the beauty segment. According to the company’s website, SoPa already has 1.5 million users and over 3,500 merchants or brands tied to it.  (The homepage shows the Singapore skyline, but that’s not where it does business.) Society Pass also operates LeFlair, a Vietnamese e-commerce site bought in June, which sells discounted clothes and luxury goods.

One thing I have learned in 43 years covering business is that the line between entrepreneur and promoter is thinner than it appears. That’s the case with Nguyen, who has what one Asian publication calls a troubled past. For instance, the company’s former chief technology officer sued, claiming a breach of his employment agreement.

Grading Society Pass

The initial reaction to Society Pass’ IPO put it in the Russell 2000 in December. Its current market cap would have it listed as about the 1991st company in that index, just ahead of medtech company Neuronetics (NASDAQ:STIM).

The announcement of the Russell listing gave SOPA stock a short-term lift. But it has lost half its value since then.

Given the small market cap of Society Pass, it’s vulnerable to even a single negative article on a website like InvestorPlace. Our David Moadel wrote such an article on Jan. 4.

As Moadel noted, Society Pass generated just $83,534 in revenue during the third quarter and booked a loss of roughly $8.4 million. This might be blamed on the costs of coming public, but it lost another $7 million in the first half of 2021.

The Bottom Line on SOPA Stock

I advised a loyalty startup over 20 years ago, so I know first-hand it’s a hard business to launch. You need big partners who can help carry the marketing load.

Bakkt Holdings (NYSE:BKKT), which I have written about a number of times, has backing from MasterCard (NYSE:MA) and Starbucks (NASDAQ:SBUX), as well as Intercontinental Exchange (NYSE:ICE), owner of the New York Stock Exchange. But that stock has also taken a swan dive since its Oct. 18 IPO, falling from the mid-$30s in early November to about $5.25 a share now. Society Pass doesn’t have that kind of backing.

If you are buying Society Pass stock today, you’re in the Dennis Nguyen business. Every entrepreneur has promise. Good execution can make for success anywhere. But I’d like to see some performance before considering an investment.

On the date of publication, Dana Blankenhorn held no positions in any company mentioned in this story. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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