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  1. #21
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    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.

  2. #22
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    Quote Originally Posted by Joshuatree View Post
    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.

  3. #23
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    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.

  4. #24
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    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 ...
    Last edited by Toulouse - Luzern; 27-02-2019 at 08:15 PM.

  5. #25
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    Quote Originally Posted by Toulouse - Luzern View Post
    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.

  6. #26
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    Quote Originally Posted by allfromacell View Post
    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?

  7. #27
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    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.

  8. #28
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    Quote Originally Posted by mikeybycrikey View Post
    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.
    Last edited by zgnz; 08-05-2019 at 02:58 PM.

  9. #29
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    Quote Originally Posted by zgnz View Post
    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.

  10. #30
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    Quote Originally Posted by trader_jackson View Post
    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.

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