Originally Posted by
zgnz
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.