Afterpay Touch (APT) - An Absolute Screamer

[Jaa]

Livewire has Afterpay as its most tipped stock for 2018.

10 Most Tipped Stocks for 2018 (https://www.livewiremarkets.com/wires/the-ten-most-tipped-stocks-for-2018)


I like AfterPay, I think it is an absolute screamer. It’s got a billion dollar market cap, they’ve got 40% EPS growth this year, 50% EPS growth next year, and multiples going beyond that. They’ve only scratched the surface on the number of clients that will sign up, and only scratched the surface of what they will do globally. This company is going to do very, very well over the next three years.

The Australian also has a good backgrounder article on Afterpay (http://www.theaustralian.com.au/news/latest-news/afterpay-at-record-high-as-sales-surge/news-story/d1f2c326fd92247e81c91491f5b93b9d).

Share price is up over 200% since listing 7 months ago and lots of good news was released yesterday. Record sales, customers and a potential entry into the US etc.

Anyone in on this one?

[JeremyALD]

I have a few of these. Insane levels of take up in Australia and the US launch is looking promising. Customers are huge advocates for this product.

Some risk around regulation and a fairly high premium already baked into the SP but I think long term this could be a good pick.

[Jaa]

Up 20% today on a bullish update and almost doubled since this thread started.

Take up has been high, 2m active customers in Aus and NZ. Expensive, but if they crack the US market guess the sky is the limit?

[Joshuatree]

Thanks for posting Jaa,a double bagger since jan, more fool most of us for not following up it seems.:mellow:

[Chanchay]

Has anyone been acquiring at the current price?

[M M]

I'm surprised by the lack of discussion on this one. Bit late to the part myself but have just placed an order. Will be interesting to see where this goes.

[Joshuatree]

One of those stocks in the deadzone of investors mindsets including mine ala missed the boat sorta drama. But hell even the Global economic investment newsletter (latest issue out now) guru John Ryder has got it in his portfolio now. a lot more upside expected here.

[Jaa]

Funny isn't it JT? It was literally the most tipped stock for the year back in January. Also didn't get on board thinking I was too late. A triple bagger since then now! :(

The afterpay model seems to work, consumers love it but always seemed easy to copy to me. What is their competitive advantage? Retailer distribution and that customers already have an account?

[ados_nz]

Is anyone here familiar with the Afterpay share purchase plan offer?

I'm holding APT shares and was on the record date..... Am I free to sell these shares now (at high $17's) and then use that money to purchase the offered shares at $17.05?

Or am I breaking some sort of rule? I have read the document and it does not appear to limit this action but someone once told me if it seems too good to be true it probably is.

[Scooter]

Is anyone here familiar with the Afterpay share purchase plan offer?

I'm holding APT shares and was on the record date..... Am I free to sell these shares now (at high $17's) and then use that money to purchase the offered shares at $17.05?

Or am I breaking some sort of rule? I have read the document and it does not appear to limit this action but someone once told me if it seems too good to be true it probably is.
I am expecting it will be scaled, so there is a game to be played of how much you want to apply for and how much you will get.

[Joshuatree]

Download Document 7.17MB (https://hotcopper.com.au/documentembed?id=uOMxKKzFkiWRTLKhOROKAxjvSTYO6ge8z BCZoedtke92GA%3D%3D) Presentation

Its a customer friendly service like lay-by but you get delivered the item straight away and can pay off in 4 fortnightly payments or less if you want. very flexible and user friendly.
Sheesh nearly $4 bill mkt cap though and not in profit yet (by my quick scan).

[Joshuatree]

Only 226 mill shares on issue plus oppies and current cap raise, @ max price $17.05. 4 traders has 2 buys and 4 outperforms, av target price $23.60
Share Purchase Plan and Booklet (https://hotcopper.com.au/threads/4402574/) Still a watcher atp.Can see it going global .

[gbogo]

https://www.finextra.com/newsarticle/32663/mastercard-and-amex-invest-in-pay-later-platform-divido?utm_medium=dailynewsletter&utm_source=2018-9-19&member=36425

looks like another competitor for APT. not sure if this is new news or already known in the market. Chart poised at a crucial point - this might push it down..

[Joshuatree]

Down nearly 20% after Senate inquiry announced. Anyone caught holding, commiserations.
l.php (https://l.facebook.com/l.php?u=https%3A%2F%2Fwww.smh.com.au%2Fbusiness%2F banking-and-finance%2Fafterpay-payday-lenders-and-debt-vultures-to-face-senate-inquiry-20181016-p50a1b.html%3Fref%3Drss%26utm_medium%3Drss%26utm_s ource%3Drss_feed%26fbclid%3DIwAR2u7F-C9UzeEdO1IOn7AJLTijuPoX3CCZNafbbX0V_-mDFzYehX2uLQIO4&h=AT3FjX777044BFrmGAaeUDN6Mr_5rfD26HpGhIV0-jq4Ocm23lESjuOiObHkei0jwJnJ9WehmtErjXhjUyycI-xS3sctyEBDB9Wm0ifbieq6k2m5dQvtaWi2iyhqnVy8uu2M7fWq QeqhcOTJSowLMofK)

[silu]

I'm not a hugely moral person but have decided not to invest in APT because of seeing the horrors of predatory lending. Used to own CCP and CLH

[Joshuatree]

I have researched it deeply but dont think APT falls into this category. If a person hasn't got the up front money for smallish purchases they pay it off in 3 or 4 instalments. I guess they get hit with high int rates if they miss payment like a credit card or is it more punitive then that?

[silu]

I have researched it deeply but dont think APT falls into this category. If a person hasn't got the up front money for smallish purchases they pay it off in 3 or 4 instalments. I guess they get hit with high int rates if they miss payment like a credit card or is it more punitive then that?

I have hardly researched it and I don't want to imply that APT is a predatory lender. I've just looked at all my financial holdings that have lay-buy, payday lending, reverse mortgages (again not saying that it is a bad product) etc offerings and decided to get out of them. I'm very worried about the personal debt levels not just in NZ but in other countries. Other companies I've divested from are HBL.NZX and CAF.ASX luckily almost all of them at the top of the cycle.

[Joshuatree]

Sorry ,i meant i havn't researched it deeply,DOH!.. I take your point. Debt in the world is very high with many living beyond their means in this consumer conditioned world and it seems nothing is going to change that until this planet starts literally burning up.

[Baddarcy]

Sorry ,i meant i havn't researched it deeply,DOH!.. I take your point. Debt in the world is very high with many living beyond their means in this consumer conditioned world and it seems nothing is going to change that until this planet starts literally burning up.

They split the payment over 4 payments, 2 weeks apart. There are no fees at time of purchase (fees are paid by the merchant). If you miss a payment you are charged fees and Afterpay block your account to stop you making more purchases. Late fees are an initial $10 and a further fee of $7 if the payment is not made within 7 days. Late fees are capped at 25% of the purchase price with a max of $51.

[allfromacell]

Pretty amazing growth released in today trading update.

"Over 3.1 million active customers in the last 12 months, growing at an average of approximately
7,500 new customers per day over Q2 FY19."

Is anyone still paying attention to this stock? Seems to have huge potential.

[Joshuatree]

You a smart recent buyer allf?.Up 13% today on $113 million turnover. No one wants to fess up as a holder? Whats dirty about it? worried about the govt review of loan artists ? the mkt aint.Not a holder atpit , missed the earlier boat.

[allfromacell]

You a smart recent buyer allf?.Up 13% today on $113 million turnover. No one wants to fess up as a holder? Whats dirty about it? worried about the govt review of loan artists ? the mkt aint.Not a holder atpit , missed the earlier boat.

I too missed the earlier boat JT... Maybe the boat has a lot more distance to travel yet? Theses high growth stocks are always so difficult to value however I find companies getting good results tend to continue performing well.

Regulatory risk is definitely something to consider. I really don't see how a company providing zero fee interest free loans is dirty. They've also earning less from late fees now as a percentage of revenue for more sustainable merchant fees which is good.

[mikeybycrikey]

I’ve been paying attention to APT for a while but haven’t invested. There is a lot of future growth priced in and I feel like it has grown so quickly that it’s hard to tell if they will fulfill that growth expectation.

Off the top of my head, current SP is pricing in revenue and profit growth of maybe very roughly 5x, which would be maybe 20 million US customers. Certainly achievable but a real chance they will fall short too. Even if they keep growing customer numbers, will those customers keep using the service over the long term? Even that’s a little unknown so far.

It’s definitely going to be an interesting and scary ride which may or may not pay off.

[Toulouse - Luzern]

My recollections from my review of report and apparent strategy. (Usual E&OE and DYOR caveats apply)


Analysis and Risk Assessment

(1) APT SP rose when it seemed unlikely their activities would be impacted by any Govt action post the Royal Commission.
(2) In the most recent report APT reduced the amount of revenue earned from people unble to pay on time reinforcing (1). APT have declined up to 30% of proposed transactions. APT approved customers are good for retailers as proven payers building from low initial $ levels.
(3) Retailers like APT as its charges are less than Credit Cards. 1.75% compared with most at 2% or >. Retailers payments of 1.75% provide most of APT revenue. Every APT sale is more profitable for the retailer.
(4) Terrific growth on any metric - AU US UK and potentially Europe and World. # Customers, # transactions, # retailers, $ value,
(5) Fundamentally I see the key strategic metric is gross revenue at 1.75% of transaction $ and to me does not seem enough.
(6) Retail customers are not targeted as revenue, to avoid possible Govt action or restriction ....
(7) Second key fundamental APT is not yet profitable
(8) Therefore the more you sell at 1.75% margin the more you lose, the more you grow or expand internationally - you get the picture
(9) Huge growth without profit = ???
(10) While the share price rose strongly up 47% in 8 weeks this year - ANZ Securities site today shows APT PE at -441

Now of course if the fundamentals and strategy as above change then ...

[JeremyALD]

My recollections from my review of report and apparent strategy. (Usual E&OE and DYOR caveats apply)


Analysis and Risk Assessment

(1) APT SP rose when it seemed unlikely their activities would be impacted by any Govt action post the Royal Commission.
(2) In the most recent report APT reduced the amount of revenue earned from people unble to pay on time reinforcing (1). APT have declined up to 30% of proposed transactions. APT approved customers are good for retailers as proven payers building from low initial $ levels.
(3) Retailers like APT as its charges are less than Credit Cards. 1.75% compared with most at 2% or >. Retailers payments of 1.75% provide most of APT revenue. Every APT sale is more profitable for the retailer.
(4) Terrific growth on any metric - AU US UK and potentially Europe and World. # Customers, # transactions, # retailers, $ value,
(5) Fundamentally I see the key strategic metric is gross revenue at 1.75% of transaction $ and to me does not seem enough.
(6) Retail customers are not targeted as revenue, to avoid possible Govt action or restriction ....
(7) Second key fundamental APT is not yet profitable
(8) Therefore the more you sell at 1.75% margin the more you lose, the more you grow or expand internationally - you get the picture
(9) Huge growth without profit = ???
(10) While the share price rose strongly up 47% in 8 weeks this year - ANZ Securities site today shows APT PE at -441

Now of course if the fundamentals and strategy as above change then ...

They charge merchants 4% of total transaction value, their net interest margin is 2%.

I bought into Afterpay at $7 and even then people said it was expensive. There is huge growth factored into the SP but this industry is taking off all around the world and afterpay certainly have the first mover advantage. They have a brilliant leadership team and haven't put a foot wrong since listing. Its a very volatile stock so if people are interested they can probably pick a time when it drops below $15.

The numbers coming out of USA are extremely impressive and they definitely have they right approach of trying to build market share whilst the iron is hot.

[allfromacell]

I too missed the earlier boat JT... Maybe the boat has a lot more distance to travel yet? Theses high growth stocks are always so difficult to value however I find companies getting good results tend to continue performing well.

Regulatory risk is definitely something to consider. I really don't see how a company providing zero fee interest free loans is dirty. They've also earning less from late fees now as a percentage of revenue for more sustainable merchant fees which is good.



Boat still humming along, shows it wasn't too late to jump aboard. The real question though, is it too late now?

[mikeybycrikey]

This seems like a very long way of saying that there is a lot of growth from US and UK priced in. If that growth doesn't happen then APT will be worth less than it currently is.

At $28 where the SP is right now, I feel like the market is pricing in this growth as a near certainty. I liked it at $10 and on a good day maybe $20 but at $30 I struggle to see much future SP growth even as the company grows.

As a ballpark, I reckon APT need to be processing maybe $30 billion of payments per year (say within 5 years) to justify today's market cap of $6.7B. Currently they are doing $3.5B. Is there 10x growth available to them? Who knows. And can they keep taking 4% margin as time goes on?

I think if you're valuing APT at $500m then I don't think you're pricing in any future growth at all, but pricing it at $6.7B (market cap) isn't pricing in any chance of failure either.

[zgnz]

This seems like a very long way of saying that there is a lot of growth from US and UK priced in. If that growth doesn't happen then APT will be worth less than it currently is.

At $28 where the SP is right now, I feel like the market is pricing in this growth as a near certainty. I liked it at $10 and on a good day maybe $20 but at $30 I struggle to see much future SP growth even as the company grows.

As a ballpark, I reckon APT need to be processing maybe $30 billion of payments per year (say within 5 years) to justify today's market cap of $6.7B. Currently they are doing $3.5B. Is there 10x growth available to them? Who knows. And can they keep taking 4% margin as time goes on?

I think if you're valuing APT at $500m then I don't think you're pricing in any future growth at all, but pricing it at $6.7B (market cap) isn't pricing in any chance of failure either.

Agree with your summation.

The author of that article has a somewhat pessimistic view of the space (and quotes some dubious statistics.) Personally I only see the BNPL (Buy now, Pay later) space growing, of which Afterpay has a great brand, and first mover advantage in. A large percentage of the population (especially in the US) do live paycheck-to-paycheck and will find great utility in the service.

What the author is also missing is the psychological aspects at play. Paying something off over a series installments is psychologically less painful than a lump payment all at once. Even if people can afford it, they can't necessarily justify it to themselves. But Afterpay makes it easier.

The fact is that the millennial cohort are not signing up for credit cards, but continue to use their debit cards tied to their mobile phones -- Afterpay has the ability to help fill that gap, and a very bright future ahead. And as the director Nick Molnar says, people don't want to take out a loan to buy a dress, they just want help budgeting for it.

Charlie Munger always talks about the power of incentives. Both the customers love it, and the merchants love it, as it increases top line revenue. In Brazil the vast majority of retail goods are sold on installments (and the largest visible price on the tag is usually the installment, not the full price.)

I genuinely think this a once in a decade/generation opportunity, and am positioned accordingly. Although I agree that the current valuation seems a bit ahead of itself. If they don't live up to their growth projections, it will violently correct. But if they continue to execute properly over the next few years, it could be much much bigger.

[trader_jackson]

Agree with your summation.

The author of that article has a somewhat pessimistic view of the space (and quotes some dubious statistics.) Personally I only see the BNPL (Buy now, Pay later) space growing, of which Afterpay has a great brand, and first mover advantage in. A large percentage of the population (especially in the US) do live paycheck-to-paycheck and will find great utility in the service.

What the author is also missing is the psychological aspects at play. Paying something off over a series installments is psychologically less painful than a lump payment all at once. Even if people can afford it, they can't necessarily justify it to themselves. But Afterpay makes it easier.

The fact is that the millennial cohort are not signing up for credit cards, but continue to use their debit cards tied to their mobile phones -- Afterpay has the ability to help fill that gap, and a very bright future ahead. And as the director Nick Molnar says, people don't want to take out a loan to buy a dress, they just want help budgeting for it.

Charlie Munger always talks about the power of incentives. Both the customers love it, and the merchants love it, as it increases top line revenue. In Brazil the vast majority of retail goods are sold on installments (and the largest visible price on the tag is usually the installment, not the full price.)

I genuinely think this a once in a decade/generation opportunity, and am positioned accordingly. Although I agree that the current valuation seems a bit ahead of itself. If they don't live up to their growth projections, it will violently correct. But if they continue to execute properly over the next few years, it could be much much bigger.

Agree with all your points... but what if I told you there were 5 afterpays all gunning for the same end user (the customer using their debit, credit, what ever card) and merchants don't care about loyalty with any one provider so end up going with multiple/all of them? (given the technology these days is there to accept all of them - they are all basically the same)
APT started first, doesn't mean it'll finish first.

[zgnz]

Agree with all your points... but what if I told you there were 5 afterpays all gunning for the same end user (the customer using their debit, credit, what ever card) and merchants don't care about loyalty with any one provider so end up going with multiple/all of them? (given the technology these days is there to accept all of them - they are all basically the same)
APT started first, doesn't mean it'll finish first.

For Merchants, they only have the resources/inclination to integrate the top few providers. In-store integrations are costly, and involve training staff. Likewise consumers don't want the hassle of signing up to multiple services. They'll stick with the one or two major ones, which they trust, and many shop exclusively at only Merchants that provide them.

For online shopping there is only so much real estate available through the checkout pages. The majority of online product pages in Australia have an Afterpay logo displayed predominantly on them.

The larger transaction volume (GMV/TMV) processed through the top few providers, will compound their ability to detect fraud & build a trusted list of low risk customers. This will mean they can keep Merchant fees more competitive than lesser known 'interest-free' providers.

Most merchants are also extremely conscious of providing a responsible service to their customers, and not laden them with debt & fees, or a poor experience.

Afterpay has won Australia, with Zip second. The rest are just picking the scraps. I don't see this changing, the brand awareness for Afterpay is equivalent to an Uber, or Airbnb. Walk through a Westfield in Australia and it's Afterpay signs as far as the eye can see. Consumers are happy, why change?

New Zealand is Afterpay and Laybuy.

For large ticket items (>$1500) over longer installment periods, it's an entirely different game, one which Afterpay/Laybuy doesn't play in.

[zgnz]

There's some truth to this. However, it's unknown weather this will play out in the long term. Merchants like myself do like it, however, it comes with a 6% fee, which is expensive. The "increases revenue" argument is valid, but there hasn't been any large third party studies to confirm this is true. I joined because I wanted to keep up with the latest technology and trends online. At the beginning there was lots of buzz around the "buy now pay later" model and having Afterpay available on your site was seen as a status symbol. Now the buzz has died down and I don't see it as important.

I feel like customers maybe experiencing the same 'hangover effect'. Do customers really love Afterpay? Maybe. But I suspect a lot of the hype has gone and only a very small percentage of users are continuing to use the service regularly. This is my main argument, and Afterpay maybe trying to hide this by only reporting certain statistics and chasing after new growth to replace end users.


I see the overall system working as such that a certain percentage (say 10 to 20%) of consumers will always want to spread the cost with installments. However the more overall merchants that have now implemented it, the less special it is, and the less likely these consumers will seek you out to buy from you. Assuming overall consumer discretionary spending is limited at a fixed amount, it turns from an advantage having it in the beginning, to potentially just a disadvantage of not having it once it is ubiquitous. Genius really.




Afterpay's brand is very strong. This is the reason why it's value is so high. However outside of Australia it's a different story. There's lots of competitors now. However, it does seem like they're doing well.

My main attack isn't on Afterpay but on the industry itself. Afterpay just happens to be the largest and most valued.

Basically, I'm saying this industry is going through the same thing as the Groupon trend experienced in the early 2010's. It's impact was over estimated and a bubble was formed. Consumers like new things but they're fickle and aren't loyal in the long term. Time will tell.

I remember the Groupon mania, fueled by a massive amount of unprofitable advertising spend to capture emails, to then spam them deals until they eventually got annoyed, unsubscribed & churned off. Groupon merchants also got frustrated making no money serving low value customers who likely never came back. The model was flawed to begin with.

I do agree that the valuations for the BNPL companies on the ASX look extremely bubbley. And when the likes of Splitit (Israeli) and Sezzle (American) come to list exclusively on the ASX and not the NASDAQ, you can't not help but get concerned and want to run for the exits. But overall I lean towards this being a sustaining paradigm shift, and not just a fad. And currently it's a merchant land grab that is playing out.

As a long term investor, I think I've backed the right horse, and am content on riding it out, even during the times it'll look to be massively overvalued, and the times it'll look to be undervalued (assuming the overall thesis remains intact.) But you're right time will tell!

[zgnz]

These 10% to 20% of consumers are basically young women who don't know how to budget properly. There's no legitimate reason to use Afterpay. Spreading the cost over a few extra weeks is just lazy and over the long run will cost more, as you're likely to spend more, and eventually get stung for late fees.

I don't entirely disagree with this point, however instant gratification is a powerful motivator, and there are other motivations driving this consumer behavior at play, such as;

- They use it when shopping online because they don’t want to outlay (risk) the full amount of money before the item arrives, and before they are sure it fits (if clothing.)

- They use it because they don’t have all the money available right now to spend. It helps them not feel as guilty buying the more expensive better quality items they want and desire.

- They use it because they are unsure of that unexpected bill that might pop up, so they can keep that money sitting in their bank account longer in case they need it.

- They use it because they want to help hide the amount of money they spent from their partner in a given month (those with shared bank accounts.)

- They use it online, because it saves them having to hunt around & punch in the numbers from their debit/credit card (like PayPal.)


For young adults who don’t have a lot of money saved up, or frankly anyone living paycheck to paycheck (a lot of people) Afterpay is attractive.

Some of the most popular new finance apps in the US app store right now are around extending small amounts of credit to users between their paycheck cycles, cheaply.




Honest question, do you regularly use Afterpay? I'm guessing not cause you're a male and make investments. But more so, you're smart enough not to use it.


You're right, I generally wouldn't be using it if I wasn't invested (but I do, so I can understand the user experience & psychology of it.) I attach my credit card to my Afterpay account, and get to keep my money sitting in my bank account earning interest for longer.

I'm not really the target demographic, but if I was just entering the work force, and didn't go through the hassle of applying for a credit card, Afterpay would help fill some of that utility, some of the time.

I’ve spoken to people in my immediate circle who continue to use it all the time. Some who use it every once in awhile, and some not at all.




Afterpay isn't a genuine finance product. It' some how found this weird niche that seems to work well for a certain demographic. However it's not sustainable in the long run as over time it will suffer from huge churn.

The typical user behavior on the system is that a user will use it for a few months, then stop, with exception of the hardcore 1% of users. Afterpay then aggressively seeks out new users to cover up the loss of previous users. The bubble will pop soon. It's already popped in Australia, and now they're using the US and UK markets to fill the holes.


I don't particularly see that user behavior (stopping usage after a few months) reflected in any of Afterpay's numbers (at least not yet.) Curious where you're getting that impression from?

Afterpay themselves have told us on January, that 1 in 4 millennials in Australia have used Afterpay (~1.8 Million.) They also say that 2.5 million users in ANZ are active users (source pg 2 (https://www.asx.com.au/asxpdf/20190118/pdf/441ybcys5fpzkj.pdf).) Then removing NZ from the equation (lets say remove 1/6th of the 2.5M figure) And assuming that 71% of users are millennials (pg.7 (https://www.asx.com.au/asxpdf/20190226/pdf/442z36nc36csb8.pdf)) gives me a figure of 1.49M active Australian millennials that have transacted within the past 12 months, which is 82% of all millennials that have ever used it. Not bad.

As well, 40% of the active user base are transacting each month (pg.10 (https://www.asx.com.au/asxpdf/20190226/pdf/442z36nc36csb8.pdf)) The average spend per user in Australia has only kept increasing, having doubled from a couple years ago.

In Australia at least, people are being presented the option to use it pretty much each and every time they get to the checkout, and when it costs the same, and there's no extra interest, I bet many will continue to use it.

Likewise, the unit economics look healthy (pg.14 (https://www.asx.com.au/asxpdf/20190226/pdf/442z36nc36csb8.pdf)). I believe they're expanding to US/UK, as the model works, not just because they are just trying to 'fill the holes'.




As a merchant, I basically jumped on board to join the trend. Afterpay seemed to explode out of no where and one of my competitors had it so I decided to join up.

However, I have not seen any genuine growth or surge of orders on the system over time. In other words, Afterpay's growth is coming from signing up new users and new merchants and not growing the market that already exists. It's hard to explain because that is the definition of growth, but it's phony growth. It's similar to "multi level marketing".

If it was genuine growth, I would expect the percentage of orders on my Afterpay account to grow but I'm not seeing that in any significant way. The percentage of orders I'm getting is the same as last year almost.

What's interesting, is that Afterpay hit the ground running, as it got so much media attention and social media exposure. So when I first signed up I got orders. And during the Christmas period I get lots. Now it's back to last years levels. It's not down, it's maybe even more, but not a lot more, maybe like 10%-15% more than last year.


Interesting to hear your experience of it as a Merchant.

However, overall that’s how it should work, Afterpay is predominantly growing off the back of the Merchants checkout flow. The more Merchants offering Afterpay, the more active users Afterpay reports, and the more transaction volume they process.

As a Merchant, there will be some small additional user base being sent directly off the Afterpay platform (website, app) to you. But for the rest of your usual customers, they are just utilizing the service available (and hopefully spending a bit more, while doing so.)

I do believe that a certain percentage of your customers will always be in a position of preferring to pay by installments, and that is reflected in your numbers being reasonably consistent since you first implemented it. And more likely during Christmas, when peoples budgets are especially stretched. If you're finding over time the overall percentage of total users checking out with Afterpay dropping (relative to other payment processors) then that would be a negative signal for the company.

It is relatively early in the life of the company, and keeping an eye on the numbers reported by the company will be important to building an accurate picture (especially if/when Australia matures.)

[ShareFodder]

Great to see some discussion happening in this thread. It's difficult to extrapolate the experiences of individual merchants but good to hear them none the less.

APT is not just a payment method. They says they are now the largest generator of leads after Google which is a massive competitive advantage for helping merchants to sell discretionary items. I'm still bullish although much seems to be priced in.

[ShareFodder]

Seriously, this is fraud if they're making up statistics like that.

Yes, you would think they'd have to be pretty dumb to make these statistics up, so I'm inclined to take them seriously. Major online retailers would know exactly where each customer arrived from (eg, afterpay marketing, google search or just browsing the retailer website) when a product is purchased so I don't think surveys are necessary to come up with this type of data. Ultimately, they will be able to charge a lot more than 4% if their marketing is creating sales out of thin air and selling out the latest dress or widget. They need to start a rewards program, that would turbo charge growth.

[zgnz]

Are they saying users go to Afterpay.com and search through the directory of listings, and then they complete a purchase on a merchants website? There's no way they are number two if this is the case. How would they even verify the data?

According to Alexa.com, Afterpay's home page ranks 407 in Australia. (source: https://www.alexa.com/siteinfo/afterpay.com )

There's Ebay, Facebook, Twitter, Amazon, Ozbargain, gumtree, and countless others that would rank far higher.


Don't underestimate the use of the app, the demographic of Afterpay users are using the app, not the website. The large majority of Afterpay users have the app installed. e.g. It's usually ranking between 20 - 40th on the Apple NZ free apps rankings, along with the likes of Aliexpress, trademe app etc.

The clicks off the Afterpay app to retailers have tracking codes attached -- unlike something like Instagram, which isn't friendly to anyone linking off their platform, and makes it much harder to attribute credit as a 'lead'.

I take managements statements regarding 'second largest source of leads' as an anecdote from a number of their large fashion retailers.

[mikeybycrikey]

Afterpay app is currently ranked number 81 in NZ.

https://www.apple.com/nz/itunes/charts/free-apps/ (https://www.apple.com/nz/itunes/charts/free-apps/)

On first release the app debuted at number 1.

[...]
Not saying that the app is bad. Just saying that it looks like the app experienced a huge following during the media buzz of 2018.

I've just been looking at app rankings on App Annie (would post a link but you need a login). It looks like their app did reach number 1 in the Australian store, where it stayed for 3 days. It fell back since then, which I would expect but has almost never been out of the top 100 in the past 12 months, and has almost never been out of the top 5 in the shopping category.

10550

(not sure how useful that graph will be, I have never posted an image here before)

Performance in the US has been worse (as you might expect), with the app consistently placed 100-150 in the shopping category, and about 1500th overall, but slowly improving.

I think the app store rankings are only new downloads so that would indicate some continued growth in users.

[ShareFodder]

The stock price today is suggesting that Afterpay will experience similar success in the USA market as it did in Australia, but the data clearly says otherwise.

Well, apparently as recently as April, Goldman told their clients.

“Early signs of success in the US remain strong: APT has experienced a record month of US app downloads, website visitations numbers are growing and it continues to add more retailers. APT will likely need to invest in infrastructure (staff, marketing, customer service, etc.) to support this strong growth and, as a result, our earnings revisions are more muted than our top line upgrades.”

And then in May, APT announced their $300m US receivables facility.

[ShareFodder]

Yeah, but you have to take this information with a 'grain of salt'. It's all coming off the recent launch into the US. Also, this data has come from the post Christmas period, which as I've said previously is part of their better period (along with the pre-Christmas season).

Also, how do you define what "strong" is when there is little to compare it to. The US expansion has only been going on for less than 1 year.

This is very similar to what Big Review TV said when it first expanded into the US. It's easy to spend a lot on marketing and promotion and enter a new large market and generate growth headlines such as those.

It's extremely unlikely that Afterpay will be able to reproduce it's same success without the free news and social media buzz it had. Also, with increased competition, delayed entry, and operating from outside the US, this would make it even harder.

I'm not saying that things aren't going well in the US for Afterpay. It's just that it's way too early to see. The market has already priced in success based on dubious evidence and irrational exuberance.

Over $25m worth or shorts yesterday:

https://www.shortman.com.au/stock?q=apt

Down again today.

Today, APT announced 1.5m US customers have 'used' afterpay and 3,300 US retailers on board. These results seem pretty impressive indicating about 70% growth in the last 3 months (the last numbers I saw were 1,900 retailers and 900k active customers around the end of feb). So, I don't think there is much sign of things slowing down post Christmas.

[zgnz]

Today, APT announced 1.5m US customers have 'used' afterpay and 3,300 US retailers on board. These results seem pretty impressive indicating about 70% growth in the last 3 months (the last numbers I saw were 1,900 retailers and 900k active customers around the end of feb). So, I don't think there is much sign of things slowing down post Christmas.

Also some nice new big US merchant integrations with Levi's & Ray-ban on-board. Exciting times ahead.

[silu]

I wouldn't touch APT for personal reasons but I see that they are in the cross hair of AUSTRAC. If the Australians are investigating it for potential Money laundering/Counter Terrorism then what would the Americans do who are even more paranoid about this. I still remember the Unlawful Internet Gambling Enforcement Act of 2006 that was tagged on to a complete different bill and basically killed online poker.

I believe they are way overvalued for the markets they are in and honestly I can't see them entering the US market successfully. The finance sector over there is very protective of its own.

To all holders I hope you're happy with the gains (most likely) you got but you might want to think about whether the future is actually rosy for this company.

[trader_jackson]

Naughty naughty, doing cap raising right before an investigation announcement.

[silu]

The price action on this on Friday was filthy. The swing in the last hour or so was crazy. All it took was the Visa announcement? If it was wouldn't that show that this coy would have no point of difference at all. Also price action pre-market seems to indicate a big drop today.

[ShareFodder]

The price action on this on Friday was filthy. The swing in the last hour or so was crazy. All it took was the Visa announcement?

Clearly a lot of momentum players. The Visa announcement was out before trading opening on Friday yet the stock didn't drop until the last hour.

[winner69]

Visa announces buy-now pay-later offering: Is this the end for Afterpay?


https://www.smartcompany.com.au/finance/afterpay-visa-bnpl/?utm_campaign=SC&utm_medium=email&utm_source=newsletter&utm_content=smartco_daily&term=2019-07-01

[Joshuatree]

Wow down 32% today. Nobody in still i hope.

[silu]

Wow down 32% today. Nobody in still i hope.

I've been watching with a huge dose of Schadenfreude. But I hope no one here is holding.

[percy]

Never held as I did not like the business model.Thought it would encourage young people to get into the habit of spending before they have earnt the money.
Pity really as KW told me to buy them at either $1.20 or $1.50....
The rest is as they say "all history."...lol.

[Joshuatree]

Big Un BIG another stock KW was keen on went to zero. She had far more good picks then bad tho.

[silu]

what a spread today +-30%.

[Jaa]

Down from $40 to $9.9 !!

I got the title of this thread right. :eek2:

Disclosure: Always wanted to but never bought in.

[trader_jackson]

Down from $40 to $9.9 !!

I got the title of this thread right. :eek2:

Disclosure: Always wanted to but never bought in.

When it gets close to NTA I would be interested, but at least it is now back to a more 'realistic' level than the ridiculously overvalued on any metric/ideology near $40 price it was just a month ago

[silu]

When it gets close to NTA I would be interested, but at least it is now back to a more 'realistic' level than the ridiculously overvalued on any metric/ideology near $40 price it was just a month ago

I don't think there are realistic levels for Afterpay. They have to grow rapidly otherwise their business model is failing. I wouldn't be surprised if this goes belly-up over the next few months.

[percy]

I don't think there are realistic levels for Afterpay. They have to grow rapidly otherwise their business model is failing. I wouldn't be surprised if this goes belly-up over the next few months.

Had no really thought it through,but now that I have,I think you are most probably right.

[flyer]

Not what the market is saying today, over 50% in one day. Don’t hold but wish I brought some yesterday

[silu]

Not what the market is saying today, over 50% in one day. Don’t hold but wish I brought some yesterday

I'm pretty sure you don't wish anymore.

[Entrep]

Time to buy some AUD and be prepared to grab some of these

[JeremyALD]

I can't believe they haven't updated the market on the impact of Covid-19 on transaction volume.

An announcement on the 19th of March stated:



I have both Afterpay NZ and Afterpay Australia merchant accounts. My Afterpay NZ account has gone to zero as the country is in lock down. My Afterpay Australia account has started to drop significantly, especially in the last few days. It's likely that Australia will go into full lock down by next week. Most retail stores in Australia have already started to close and won't reopen for another 4 weeks, possibly longer.

Afterpay's main source of revenue is transaction fees from merchants. It's likely their revenue has already been significantly impacted, perhaps as much as 90% or more, yet no update has been provided to the market.

The announcement on the 19th of March stated:



This suggests that they are not going to check their "numbers" until after the March quarter, which could be another 10 days from now.

Unbelievable lack of company governance.

This is just wrong sorry.

The majority of their business comes from online which has increased in Australia, UK and United States. NZ would have completely frozen but that is a tiny part of their business. Even if countries go into lockdown they have no direct product costs so they can take a short term hit.

Of course as revenue takes a hit for retailers their growth will slow in the short term, however afterpay is in exponential growth and I actually think this presents opportunity for consolidation in the BNPL sector which as a first mover could prove beneficial to afterpay.

[trader_jackson]

https://www.stuff.co.nz/business/120826974/afterpay-could-hold-on-to-tens-of-thousands-during-lockdown-retailer-says

Seems like APT have introduced measures that mean they don't have to pay anything out until the item has been dispatched (rather than at point of payment)... Could it be that afterpay are actually facing a cash crunch themselves? Beginning of the end of them if so... not a good look when they appear to be killing their customers (aka merchants)

[sb9]

Big moves in APT y'day after chinese tech giant Tencent reveals its built a 5% stake in the company since started buying from March. What spectacular rise from low of $9 in late March to now at $36 as of y'day, a four increase in just over a month.

Disc-Not a holder, just wondering how many these types of buying we'll witness from Chinese under current depressed asset price levels.

[zgnz]

Continually misrepresented and misunderstood APT going from strength to strength, attracting world class tech investors along the way (Matrix Partners, Coatue, Tencent etc)

eCommerce is going gangbusters since everyone is now stuck at home, of which Afterpay will be a beneficiary. Even more so, since people will be more budget focused (Afterpay is used as a budgeting tool.)

They'll likely weather the economic downturn just fine thanks to small outstanding balances, and automated payments (although to be confirmed next report.)

This has been such a Peter Lynch stock, seeing Afterpay logos popping up everywhere over the last couple years.

[ShareFodder]

Continually misrepresented and misunderstood APT going from strength to strength.

Completely agree, many underestimate this business. But where does it end, it's $63/share and > $16b market cap today. How high can she go?

[silu]

I admit it I don't understand their valuation but then I didn't understand Wirecard either and in the end it was all a mirage.
https://www.smh.com.au/business/companies/wirecard-scandal-has-all-the-hallmarks-of-enron-and-the-carnage-that-followed-20200630-p557og.html

Obviously not held

[stoploss]

When it gets close to NTA I would be interested, but at least it is now back to a more 'realistic' level than the ridiculously overvalued on any metric/ideology near $40 price it was just a month ago

Penny for your thoughts now TJ ?

[trader_jackson]

Penny for your thoughts now TJ ?

absolutely shell shocked to be honest! But congrats to holders none the less. I certainly wouldn't touch it as i just don't understand how the business could justify such a share price... an AFR article seems to agree nothing the BNPL stocks appear to be in a greater bubble than the tech companies in 2000... will this be an Amazon or a WorldCom? hard to say... although I did come close when the share price was sub $10... if only i had dipped my toe in!

[stoploss]

absolutely shell shocked to be honest! But congrats to holders none the less. I certainly wouldn't touch it as i just don't understand how the business could justify such a share price... an AFR article seems to agree nothing the BNPL stocks appear to be in a greater bubble than the tech companies in 2000... will this be an Amazon or a WorldCom? hard to say... although I did come close when the share price was sub $10... if only i had dipped my toe in!
I came across these guys when they were 3 something ... I had budget clients turning up with all sorts of debts .... looking at the bank statements I could see these payments going out . Never invested for this reason as thought they had a lot of bad clients , obviously got that wrong . Thinking about it , if it’s 4 payments they budget for , much better than a credit card at 25%.....
I suppose I did benefit as PIE Funds invested ....,

[JeremyALD]

Been my best ever investment that's for sure!

The valuation seems a bit nuts now, but I do believe this will be one of the biggest payment companies in the world so I don't have any intention to sell for now :)

[zgnz]

Been my best ever investment that's for sure!

The valuation seems a bit nuts now, but I do believe this will be one of the biggest payment companies in the world so I don't have any intention to sell for now :)

Agree with this. Already priced in the next few years growth (>100% YoY) at these prices... however, as I thought back when I first invested, this will either get taken over, or grow to become a major player in the payments space.

I have no intention of selling any time soon, as I can see the path to becoming a $USD 35-40 billion valuation company, within a 3-5 year time frame, imo.

I would add, I see little to no value in the other BNPL ASX listed companies.

[kyanar]

Agree with this. Already priced in the next few years growth (>100% YoY) at these prices... however, as I thought back when I first invested, this will either get taken over, or grow to become a major player in the payments space.

Or their entire business model will collapse under RBA regulation. They're already investigating Afterpay specifically regarding their 6% average merchant fee and no-surcharge rule, mulling over forcing them to reduce their fee or removing the "no-surcharge" rule which would make Afterpay unattractive to retail buyers with a 6% premium over cash. Afterpay's sole response so far has been to argue with the RBA (https://www.rba.gov.au/payments-and-infrastructure/submissions/review-of-retail-payments-regulation/afterpay.pdf) that it has no jurisdiction and the RBA doesn't even know the purpose of its own mandate, which is sure to get their back up.

[zgnz]

Or their entire business model will collapse under RBA regulation. They're already investigating Afterpay specifically regarding their 6% average merchant fee and no-surcharge rule, mulling over forcing them to reduce their fee or removing the "no-surcharge" rule which would make Afterpay unattractive to retail buyers with a 6% premium over cash. Afterpay's sole response so far has been to argue with the RBA (https://www.rba.gov.au/payments-and-infrastructure/submissions/review-of-retail-payments-regulation/afterpay.pdf) that it has no jurisdiction and the RBA doesn't even know the purpose of its own mandate, which is sure to get their back up.

The most likely outcome of any potential RBA regulation would be to allow Merchants to pass on some of the Afterpay Merchant charge (surcharge) to the customer. However I don't see many Merchants actually taking this up, as it would piss off the customers, likely reducing demand. Don't forget that people using Afterpay are spending MORE on average, and Merchants are earning more, even after Afterpay takes it's commission of 4-6%. There is a reason all these businesses have added Afterpay in the first place!

I could see some smaller Merchants passing on the charge, if they could. But Afterpay could also effectively blackout any businesses that try this by removing them from the free Afterpay Directory (currently sends 14M+ leads a month, for example.)

Regulating the actual percentage charged is a non starter. Merchants can already offer alternate BNPL providers which charge less (zip, humm) if they really want. Likewise Afterpay's commission still has to cover paying the banks credit/debit card interchange fees (when charging users' cards,) and write off bad debts (approx 1%, but varies depending on industry/business type.)

The future of the Afterpay story is in the US/Canada/UK now anyway, where RBA has no jurisdiction obviously. And if Afterpay grows so big that it is attracting regulatory responses from Governments, then I think shareholders will be happy regardless!

[alex f]

They make a big mention of active customers, but those could be people who have only used it once. I don’t understand the whole premise. You need a credit card to use Afterpay and get 42 days to make 3 payments after the 25% deposit. The credit card offers 55 days if items are bought in the correct cycle. Sounds to me like they are attracting people who have their credit cards maxed out. PB Tech offers Oxipay and Lay-bys .com So there is competition out there. The 2 founders are dumping shares today and have promised not to sell more until after the AGM.
All it would take is the credit card companies offering a similar service.

[kyanar]

The most likely outcome of any potential RBA regulation would be to allow Merchants to pass on some of the Afterpay Merchant charge (surcharge) to the customer. However I don't see many Merchants actually taking this up, as it would piss off the customers, likely reducing demand. Don't forget that people using Afterpay are spending MORE on average, and Merchants are earning more, even after Afterpay takes it's commission of 4-6%. There is a reason all these businesses have added Afterpay in the first place!
Credit card customers spend more on average than cash customers, and yet the instant merchants were allowed to pass on that surcharge, they did. Larger merchants will likely continue to absorb it, yet those merchants probably have preferential pricing anyway. You absolutely underestimate the short sightedness of Australian and NZ merchants.


I could see some smaller Merchants passing on the charge, if they could. But Afterpay could also effectively blackout any businesses that try this by removing them from the free Afterpay Directory (currently sends 14M+ leads a month, for example.)
It is unlikely that they would be permitted to do this if they were regulated. They'd be forced to treat everyone equally, but there'd almost certainly be a "surcharge free" filter ;)


They make a big mention of active customers, but those could be people who have only used it once. I don’t understand the whole premise. You need a credit card to use Afterpay and get 42 days to make 3 payments after the 25% deposit. The credit card offers 55 days if items are bought in the correct cycle. Sounds to me like they are attracting people who have their credit cards maxed out. PB Tech offers Oxipay and Lay-bys .com So there is competition out there. The 2 founders are dumping shares today and have promised not to sell more until after the AGM.
All it would take is the credit card companies offering a similar service.
Afterpay actually have said in their response to the RBA that the majority of their customers have a debit card attached - not a credit card. This mans the interest free period on credit cards isn't relevant, and also that Afterpay isn't paying as much to process the card.

[zgnz]

Credit card customers spend more on average than cash customers, and yet the instant merchants were allowed to pass on that surcharge, they did. Larger merchants will likely continue to absorb it, yet those merchants probably have preferential pricing anyway. You absolutely underestimate the short sightedness of Australian and NZ merchants.



Yeah you're probably right. Afterpay will no doubt will fight it hard, as it would complicate the simplicity of the current product & value proposition "interest free."

Looks like from reading today's announcements, the RBA review is on hold until next year.



They make a big mention of active customers, but those could be people who have only used it once. I don’t understand the whole premise. You need a credit card to use Afterpay and get 42 days to make 3 payments after the 25% deposit. The credit card offers 55 days if items are bought in the correct cycle. Sounds to me like they are attracting people who have their credit cards maxed out. PB Tech offers Oxipay and Lay-bys .com So there is competition out there.

As kyanar mentioned above, 87%+ of Afterpay users are using it with their debit card. It provides some of the functionality of a credit card, without actually having one. Only a small minority of younger people nowadays are actually signing up for a credit card. There is a psychological component to it also, where users feel like they are spending/budgeting with their own money in their account, rather than getting a multi thousand dollar limit to spend on a credit card (which is overwhelming, and some young people don't necessarily trust themselves.)


All it would take is the credit card companies offering a similar service.

Visa & Mastercard don't lend, it's up to the banks to do that. There is also no real incentive for banks to offer a new interest free installment product, as it competes with their current credit card business. This is why BNPL Model is incredibly disruptive, as it's Merchant pays, rather than Consumer. Afterpay have effectively gone and negotiated with each Merchant a commission & integrated the Afterpay gateway in the online checkout flow & (increasingly) in-store.


The 2 founders are dumping shares today and have promised not to sell more until after the AGM.

I wouldn't necessarily classify the sales as 'dumping'. They've sold 10% of their shareholding, like they did at about the same time last year.

[kyanar]

Visa & Mastercard don't lend, it's up to the banks to do that. There is also no real incentive for banks to offer a new interest free installment product, as it competes with their current credit card business. This is why BNPL Model is incredibly disruptive, as it's Merchant pays, rather than Consumer

You're missing that at least one credit card company has been doing it for donkey's years as a standard credit product - Latitude/GE Money (Gem Visa/Go Mastercard/Creditline). The difference is that Afterpay takes that same model and makes the repayments more bite sized on smaller purchases, with a shiny "FinTech" label.

[flyer]

on fire again, check out SZL as well, sectors all up.

[Jaa]

Afterpay now a 10 bagger from its March low of $8.01 to the price just now of $80.70 :scared:

Incredibly stuff, trade of the year!

[silu]

Afterpay now a 10 bagger from its March low of $8.01 to the price just now of $80.70 :scared:

Incredibly stuff, trade of the year!

I left a lot of money on the table with my moral stance on "pay later" companies.

[JeremyALD]

I left a lot of money on the table with my moral stance on "pay later" companies.

In my honest opinion Afterpay actually encourages responsible spending, more so than the banks. The whole way it started was from consumers becoming more savvy to debt and interest, with the movement away from credit cards. People enjoy afterpay because it makes it easier to budget payments for the things you want.

Afterpay has industry leading customer advocacy scores, never charges interest and bars further spending when you get behind in payments. They also only lend up to $2000 and only once you have a good crediy history. This varies quite a bit from the standard credit card which charges 20.95% p.a., plus late fees.

I realise this sounds like a bit of a pitch, but i genuinely believe there's a reason Afterpay is one of the most loved companies in Australia.

[zgnz]

Afterpay announcing entry into mainland Europe (Spain, France, Italy, Portugal) through an acquisition.

These countries make perfect sense to enter, due to little penetration of BNPL solutions in these markets thus far, and the predominant use of debit & credit cards in ecommerce payments.

Other EU countries likely won't be a priority, like Germany where Open Invoice payments (pay after delivery) is already extremely popular & solution saturated. Likewise Afterpay's competitor Klarna also already has a dominant position in Northern Europe (Germany, Sweden, Norway etc.)

Interesting to see how bad debts fair in these Southern European countries, no doubt they've studied the books closely of the acquiree.

[moka]

Good video comparing the BNPL stocks on ASX.

https://www.youtube.com/watch?v=5eLYsZFZiI4
The Complete BNPL 2020 Guide After PayPal's Announcement | ASX Growth Stocks (APT, Z1P, QFE, SZL)
Today we dive in and discuss all things Buy Now, Pay Later (BNPL) after PayPal's announcement entering the BNPL space this week. We analyse and discuss the following stocks: - Afterpay (ASX: APT) - ZipCo (ASX: Z1P) - Quick Fee (ASX: QFE) - SplitIt (ASX: SPT) - Sezzle (ASX: SZL) - OpenPay (ASX: OPY)

[Joshuatree]

Good video comparing the BNPL stocks on ASX.

https://www.youtube.com/watch?v=5eLYsZFZiI4
The Complete BNPL 2020 Guide After PayPal's Announcement | ASX Growth Stocks (APT, Z1P, QFE, SZL)
Today we dive in and discuss all things Buy Now, Pay Later (BNPL) after PayPal's announcement entering the BNPL space this week. We analyse and discuss the following stocks: - Afterpay (ASX: APT) - ZipCo (ASX: Z1P) - Quick Fee (ASX: QFE) - SplitIt (ASX: SPT) - Sezzle (ASX: SZL) - OpenPay (ASX: OPY)

Many thanks for this. Ive been roving around in the Sth island from kin loch to Mt Cook so have missed alot of happenings. Holding QFE and plan to buy more.

[Joshuatree]

Heres my chance to buy more QFE.

Download Document 2.38MB (https://hotcopper.com.au/documentembed?id=uOMxKKzFkiWRTLKhOROKAxjvTDYD6gi%2 FzBOZsfF8ke92GA%3D%3D)

[RupertBear]

Good video comparing the BNPL stocks on ASX.

https://www.youtube.com/watch?v=5eLYsZFZiI4
The Complete BNPL 2020 Guide After PayPal's Announcement | ASX Growth Stocks (APT, Z1P, QFE, SZL)
Today we dive in and discuss all things Buy Now, Pay Later (BNPL) after PayPal's announcement entering the BNPL space this week. We analyse and discuss the following stocks: - Afterpay (ASX: APT) - ZipCo (ASX: Z1P) - Quick Fee (ASX: QFE) - SplitIt (ASX: SPT) - Sezzle (ASX: SZL) - OpenPay (ASX: OPY)

thanks for posting this the other day Moka. I found it very helpful, so much so that I did some more research on QFE and SPT and bought a small holding of both. Very pleased To be holding both with todays partnership news :D

[moka]

Pitt Street Research video
https://vimeo.com/452365283
Friday Beers with Marc & Stuart: The BUY NOW, PAY LATER Special (28 August 2020)
This week:
0.23 Must read: Our 50-page BUY NOW, PAY LATER report
4.20 A look at the markets after COVID
5.50 Pay your debt before you make new bets Stu!
8.21 Everyone loves Maggie Beer
9.25 The Beer of the Beast

[zgnz]

As the usual busy end of year shopping quarter begins, have seen a flurry of US merchants going live over the last few weeks. GAP, Lululemon, Crocs, Adidas, Ugg (replaced zips Quadpay).

Afterpay is clearly the leading BNPL provider in both the online cosmetics & footwear space in the US. Clothing is getting there, especially with the recent GAP addition.

Also a nice announcement of a collaboration with Simon Group (aka the Westfield of the US) to roll out the instore Afterpay service. There is already a clear overlap of Afterpay merchants & Simon Group tenants already (Forever21, American Eagle, GAP etc)

Feels like it's hitting an inflection point, where all large US retailers will be starting to feel the pressure to offer a BNPL service. Even more so with covid having pushed retailers to reexamine their digital strategies.

[zgnz]

If you're looking for more evidence of a cultural shift underway..

12394

[kyanar]

If you're looking for more evidence of a cultural shift underway..

12394

I would have pointed more to the fact Pizza Hut accepts Zip Pay to be honest... You can legitimately pay off a large(hah!) pizza in four easy fortnightly payments.

[zgnz]

Nice piece on the Afterpay story on 60 minutes (https://www.youtube.com/watch?v=02D_aNS5NSc)

[mikeybycrikey]

Looks like there is an offer from Square to buy Afterpay. $126 per share. All stock offer, obviously, given who it has come from. Could be interesting.

[winner69]

Looks like there is an offer from Square to buy Afterpay. $126 per share. All stock offer, obviously, given who it has come from. Could be interesting.

Truly amazing story is Afterpay

Jeez, $39 billion is huge

Well done those who saw the opportunity

[Jaa]

An absolute screamer indeed and a 17 bagger since I started this thread....

We can't even say it was hidden, literally the most tipped stock back then in January 2018.

Always seemed too expensive to me :p :(

[Crypto Crude]

Wow people...
Huge huge news..
And even bigger than all of that is upon acquired, afterpay will accept bitcoin !!!


https://cryptopotato.com/jack-dorseys-square-to-acquire-afterpay-for-29b-and-will-allow-bitcoin-purchases/

[whatsup]

An absolute screamer indeed and a 17 bagger since I started this thread....

We can't even say it was hidden, literally the most tipped stock back then in January 2018.

Always seemed too expensive to me :p :(

Congrats Jaa, 17 bagger not to be laughed at, well done.

[Jaa]

Congrats Jaa, 17 bagger not to be laughed at, well done.

I wish mate, unfortunately I never invested.

Lesson learnt, if you are confident enough in a company to recommend it to a friend or start a ShareTrader thread then you should also invest!

[artemis]

''New Zealanders are being asked to share their experiences with Buy-Now, Pay-Later products as the Government explores if more needs to be done to mitigate the risk of consumer harm, Minister of Commerce and Consumer Affairs, David Clark said today.''

Discussion doc and survey links at the below site. Members of this site are not the main target of the consultation, but 'interested parties' are allowed to submit. So why not?

www.beehive.govt.nz/release/consumer-benefits-forefront-buy-now-pay-later-consultation

[troyvdh]

I dont mind folk making dosh...but can you guys appreciate ....well the ultimate result of rampant irresponsible spending of a significant percentage of the population.Like do you guys actually care ....cheers troy.Like what about past examples/ramifications of excessive debt in an enviornment of rising interest rates....just saying.

[moka]

I wish mate, unfortunately I never invested.

Lesson learnt, if you are confident enough in a company to recommend it to a friend or start a ShareTrader thread then you should also invest!Yes, lessons to be learnt. Unfortunately I never invested either, although I thought about it when it was around $15 - $30. I would never have believed it would go to $160 as it did in January 2021. It listed on 29/06/2017.

I noticed that Afterpay had the highest value on ASX yesterday $2,430,197K, 10x normal value. It was the last day of trading as Lanai (AU) 2 Pty Ltd, a wholly owned indirect subsidiary of Block, Inc., will acquire all of the issued shares in APT. It closed at $66.47

Xero was another one where I learnt a lesson. I sold around $30, and then it went to $156.65. Now $117.72.
Prices go further than expected both up and down. I know about the down ones, and I am not so good at predicting and believing in the up ones.

[moka]

This seems like a very long way of saying that there is a lot of growth from US and UK priced in. If that growth doesn't happen then APT will be worth less than it currently is.

At $28 where the SP is right now, I feel like the market is pricing in this growth as a near certainty. I liked it at $10 and on a good day maybe $20 but at $30 I struggle to see much future SP growth even as the company grows.

As a ballpark, I reckon APT need to be processing maybe $30 billion of payments per year (say within 5 years) to justify today's market cap of $6.7B. Currently they are doing $3.5B. Is there 10x growth available to them? Who knows. And can they keep taking 4% margin as time goes on?

I think if you're valuing APT at $500m then I don't think you're pricing in any future growth at all, but pricing it at $6.7B (market cap) isn't pricing in any chance of failure either.Posted on 07-05-2019, and it was $160 six months later. Prices do go further than expected.
I have just read the entire thread, which is fairly short. Interesting to see the different views with hindsight. Many did not invest because they were sceptical and missed out on large gains. Certainly there are lessons to be learnt. I notice that some of the companies that do really well like MFT, Xero and APT have very few comments on ST.
Market cap is 20bn now.

https://www.startupdaily.net/2021/08/afterpay-sales-doubled-to-21-billion-in-fy21/
Afterpay sales doubled to $21 billion in FY21, so it exceeded expectations.

[troyvdh]

Afterpay...For what it is worth ...I believe the business model is cheap and nasty.

[moka]

Afterpay...For what it is worth ...I believe the business model is cheap and nasty.I haven’t used Afterpay but I can see the advantages. I know people who have used it to purchase household items and it makes budgeting easier spreading it over four payments. These people did not overcommit. It has its good points. It is a blessing for some people, especially those on a low income such as NZS with no savings. Many people do live from payday to payday. I don’t think it is a good/bad situation. It certainly has been embraced by merchants and consumers, as you can see from its growth. With only four payments it does cater mainly for lower priced items, so I guess you could say it is cheap in that sense.

[troyvdh]

moka...Im sorry but I have to disagree with almost everything you said.

[clearasmud]

moka...Im sorry but I have to disagree with almost everything you said.
It's, in a way, sad that you can now borrow to eat a take away or meal and pay it over the next month.

[Southern_Belle]

I had some APT share, Now Square (SQ2). Sold & was looking to buy back in (glad I didn't) It has been dropping like a stone, I am still looking to buy back in but not too sure why this keeps dropping. Anywise heads willing to share some insights? Not looking for advice rather other viewpoints.