Australian (ASX) Stock Market Forum

APT - Afterpay Limited

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PZ99 said:
Latest > https://www.afterpay.com/en-AU/categories/new

Don't think you'll find too many of these on the ASX :)
Click to expand...

OK. This looks like just a single beauty store, not a chain or big business.

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This is an article from a couple of days ago...
Afterpay raises $300m as founders sell down stock

Buy Now Pay Later (BNPL) lender Afterpay Touch (ASX: APT) has completed a capital raising of more than $300 million to fund its global market expansion, at the same time as its co-founders sell down their stock.


The company emerged from a trading halt on Tuesday to unveil the capital raising and today announced the successful completion of a fully underwritten institutional placement of 13.8 million ordinary shares at $23 per share – above the $21.75 floor price – to raise $317.2 million.


Meanwhile, Afterpay disclosed three directors including co-founders Anthony Eisen and Nicholas Molnar as well as group executive David Hancock would sell down their stock concurrent with the placement.


The market can often respond negatively to this as investors may consider this move as a company executive’s lack of confidence in the stock.


However, the sell-down of 2.05 million shares each from Mr Eisen and Molnar and 400,000 from Mr Hancock has been allocated to US cornerstone investors Tiger Management and Woodson Capital.


Tiger is a private equity giant with investments in businesses including music streaming platform Spotify and payment software company Square. More...
 
It does ring of a buy now pay later, if you can, Bank.
Wasn't that, what the Banking Royal Commission, was about?
Suspect loans, to people who couldn't afford them?
Didn't we all say, hoorah at last suspect lending, taken to task?
 
sptrawler said:
Wasn't that, what the Banking Royal Commission, was about?
Suspect loans, to people who couldn't afford them?
Didn't we all say, hoorah at last suspect lending, taken to task?
Click to expand...
BNPLs, such as APT, are nothing like suspect lending. They're a type of limited credit, but why they're so popular with millennials is that they're a much safer product to use.

A credit card: will charge you a high interest rate (currently around 14%). Unless you pay your balance off in full, interest will be added to your balance. You then pay interest on top of your interest. So compounding interest. Plus CCs have a yearly fee.

Afterpay: 4 installment payments. No interest. No yearly fees. If you miss a payment, you'll be charged a small fixed fee (not an interest rate based on your balance). Your fees are capped. If you get multiple fees, they cap out and you're charged no more fees. There's no spiralling compound interest.

Safeguards that are in place are: you can't make any more purchases, unless you're up-to-date with your payments. Up-to-date means you're paying zero fees. Secondly, if you start missing payments, Afterpay will just totally cut you off and refuse you as a customer.

BNPLs are deliberately trying to not have their customers fall into a debt trap.
 
If anyone is interested I thought I would look at the APT chart. Over the week it has formed a full Head and Shoulders pattern at the pinnacle of its all time high price. This is seen as a bearish pattern. However I am not writing off APT just yet. I can see on the chart three current levels of support all around the $21+ level. There are two lines of support (green lines) coming from the earlier Head & Shoulders pattern, one from the neckline and one from the tip of the head from the previous H&S. Added to that APT is sitting right on top of the 38.2% Fibonacci level. So currently three levels of support. If these three support levels are failed then the next line of support could be the 50% level at around $19.50. If this is breached then we have the Fibonacci 61.8% which coincides with the major 200dsma at around $17.50. It has touched and bounced up twice from this level. If it touches this level and bounces up it would seem like a full on buy to me, depending on what the rest of the market is doing at the time.

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I think the question is what is the best that can happen and what is the worst that can happen?

Worst is that there is extensive problems with money laundering and AUSTRAC hit the company with massive fines and heavy implementation issues have to be undertaken to ensure it doesn't reoccur. Also a class action from big investors ensuring we get hurt more.

The best is that very little or no money laundering is detected and we go back to where we were.

I really don't know where this lies, probably in between. I wish I knew a bit more about what AUSTRAC are worried about.

I note the SPP hasn't proceeded yet. The price will be the volume weighted average of the last 5 days before due and maybe they don't want to give us cheap shares and depress the price further.
 
Between the head and shoulders, money laundering murmours, SPP, etc, this is looking like coming up for quite a fall. No surprise the shorters are having a play.

I see jubilant holders across the road bouncing around talking about $50 but $15 looks far more realistic at least in the short term. $10-12 wouldn't even surprise me too much (neither would staying above $18).
 
https://www.theage.com.au/business/...n-afterpay-and-investors-20190617-p51yls.html

AUSTRAC concerns weigh on Afterpay and investors
By Colin Kruger
June 17, 2019 — 7.30pm

The securities regulator says it is continuing to monitor Afterpay closely after issuing two 'please explain' notices in the space of a week, and even loyal investors have taken issue with the timing of the $300 million raising and the action by the financial crime watchdog.

"I think it certainly doesn’t read very well, and the timing really kind of stinks,” said Afterpay investor Cyan Investment Management's Dean Fergie.

Shares in the buy now, pay later payment platform sunk another 6 per cent on Monday to close at $20.27.

Afterpay has lost more than 20 per cent of its market value since Australia's financial crime watchdog AUSTRAC demanded an external audit of its compliance with anti-money laundering and counter-terrorism financing laws last week

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They've done well to more or less hold $20. Maybe $19.98 was the bottom. I'd be a little surprised but we'll see.
 
ASX Announcement today

26/06/2019 9:56:41 AM AUSTRAC Process, SPP & Co-Founder Intentions

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Appears to me from above that Eisen and Molnar are pretty confident the audit will not be a major problem.
 
https://www.theage.com.au/business/...-an-independent-chairman-20190626-p521jt.html

Afterpay needs to grow up, and appoint an independent chairman

Elizabeth Knight
Business columnist
June 27, 2019 — 12.01am

It is difficult to think of an Australian start-up that has grown as rapidly as Afterpay Touch. The buy now, pay later service listed at $1 only three years ago with a value of $125 million. Today it’s a global business worth $6.7 billion with big ambitions.

So it needs to grow up.

With a lot more investor money at stake, Afterpay needs to fill out its much-expanded skin.

There is nothing wrong with retaining its entrepreneurial DNA - but its governance and operating systems need to be fit for purpose. The oversight of this company needs to have fresh independent eyes.

You really have to question whether its two founders, Nick Molnar and Anthony Eisen should have offloaded almost $100 million worth of shares earlier this month. While completely legal, it falls into the basket of a dubious judgement call.

Finding itself the subject of an AUSTRAC probe is another situation that should have been avoided. The collision of these two events should definitely have been circumvented. Having both these events take place while raising equity - that feels imprudent even though (again) legal.

An obvious way to score some easy runs would be appointing an independent chairman and a couple more independent directors.

And it is never a good look to receive numerous queries from the ASX on disclosure.

Plus, there was the scandal last year around underage kids buying alcohol using Afterpay and fake accounts being set up to use Afterpay. The company said at the time that it would upgrade its systems to address these customer abuses.

Sure, the company can learn from these issues but courtesy of its size, it needs to do this quickly. There is no room for growing pains or indigestion.

An obvious way to score some easy runs in this regard would be appointing an independent chairman and a couple more independent directors.

Having said all that, Afterpay shareholders should take heart from Wednesday’s announcement that Molner and Eisen have instituted a self-imposed escrow on the remainder of their own shares for the next year.

It was a sensible move. Investors understandably get rattled when founders and major shareholders cash in big licks of shares. This sign of commitment was probably the major factor in the stock’s 5.5 percent rise on Wednesday.

The company’s decision to put its share purchase plan (SPP) on ice for a while was also prudent. The SSP was an opportunity for existing shareholders to acquire new shares following this month’s $317 million fully subscribed share placement. It won’t proceed until an external audit has been completed and approved by AUSTRAC.

The company says it reserves the right to ditch the retail offer - which is sensible but won’t necessarily make smaller shareholders overjoyed.

The company has given AUSTRAC the details of three candidates to undertake the audit of the company’s compliance with anti-money laundering and anti-terrorism financing laws.

It impressed on investors that it took the audit ‘very seriously’.

While some of these stumbles have bumped around the share price, its steep northward trajectory suggests investors have been inclined to overlook risks and keep their eyes on the broader prize of exporting the business offshore.

While Afterpay is one of the best performing stocks on the ASX this year, it still doesn’t turn a profit.

It reported a larger than expected loss of $22 million in the half to December 2018 even though it grew its active customers by 118 percent and its merchant income by 140 percent and reduced its net transaction loss is at the lower end of the projected range.

But it is Afterpay’s expansion into the US that is providing the blue sky.

Whether a cynic or a supporter, the fact remains that shareholders have made a lot of money from an investment in Afterpay. But a bit of governance discipline is still sorely needed.

744
 
Was trading well for most of the day. Huge dump late this afternoon, closed 10% lower...

Maybe some news that hasn't been announced yet?

Looks suspicious.
 
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The big price drop was from about 3:23 PM


Motley Fool reported Another player!!

https://www.fool.com.au/2019/06/28/...canada-launch-a-threat-to-afterpay-in-the-us/

Is Sezzle’s growth and Canada launch a threat to Afterpay in the US?
Tom Richardson | June 28, 2019

It’s probably the hottest stock on the S&P/ ASX200 (ASX: XJO) right now and the Afterpay (ASX: APT) share price hit a record high of $28.70 this morning. So many market participants will be asking why have Afterpay shares climbed 9.6x since June 2017 and to another record high today?

Over the past couple of years the shares are up due to the success of the company in getting all of its key operating metrics to travel in the right direction. Such as underlying sales, active customers, active retailers, total income, gross losses, and net transaction loss.

In particular its early success in growing its U.S. business surprised the market and has really turbocharged its valuation. However, it may be facing a credible rival in the U.S. named Sezzle, but more on that later.

Over the short term though the share price is swinging more on sentiment than actual operating updates.

For example investors have been variously worried and then relieved over a senate inquiry into the business and now an upcoming audit of its AML/KYC obligations and policies.

As the shares are so popular they’re also heavily traded by day traders looking to profit from short term momentum by scanning moving averages, charts, and other historical price action to take a position on which way the share price may move over a matter of minutes, hours, days, or weeks.

For example a popular trading strategy is to buy shares at 52-week highs in the belief that shares breaching record highs are more likely than not to move higher over the short term.

Other day traders even like to buy companies before they potentially hit round number values such as $100 in the belief that history shows a stock will then usually rise after breaching a psychologically important round number!

Other traders believe if a stock breaks a 20, 50, or 100 day moving average price to the down or upside then that is also a buy or sell signal as momentum under relative strength indices (RSIs) as an oscillator is important. Alongside order books and the market depth behind a stock.

Inter-war U.S. trader Jesse Livermore originally popularised many related trading strategies under a general method he described as “tape reading” because stock prices used to literally be printed out on tape, before electronic screens existed.

Livermore’s “tape reading” method has now metamorphised into the electronic age via any number of traders all promoting their own strategies related to price action and technical analysis.

Recently, professional algorithmic, “robot”, quant, or high frequency trading has also become a more influential part of short term stock price movements, although covering this would require another article.

Given Afterpay’s phenomenal rise it’s likely a lot of the short-term price action is down to traders attempting to jump on and off this freight train for a quick profit.

Ultimately though it’ll be Afterpay’s growth rates and underlying financial performance that decide the direction of the share price from here. I remain bullish on its growth prospects, but whether its valuation has got ahead of itself is a question for debate.

Notably it does have an emerging rival in the U.S. named Sezzle that recently launched in Canada signing up sportswear giant Kappa as a marquee retail client.

According to a source it now has 3,321 active merchants across 12 countries and 269,800 active customers.

This is roughly comparable to the 3,300 merchants Afterpay reported it had signed up in the US by the end of May, although interestingly Afterpay reported it had 1.5 million active customers more than 5x the number of Sezzle despite them having similar retailer numbers. I could only guess as to the reasons for the difference.

Sezzle then looks a potentially credible rival to Afterpay in the U.S. and much more so than the underwhelming Splitit Ltd (ASX: SPT).

Sezzle is also reportedly preparing its prospectus ahead of an upcoming ASX listing that could be hot if past history is any guide.
 
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