APT - Afterpay Limited

[PinguPingu]

Big sentiment change from GS. Upgraded with a price target from $6.30 to $11.15. Nice little break-out with big volume Friday.

 

[So_Cynical]

I sold a few on Friday - just a few, i like the sound of $11

 

[Country Lad]

I sold a few on Friday - just a few, i like the sound of $11

Then you will likely like $13 better. Up 21% so far.

 

[galumay]

Probably. I still can't believe the multiples this thing is trading at for what is not much more than a finance company with a mystery algorithm that I'd bet will blow up when the next downturn hits.

The increase in US revenue could be a hidden problem, lots of poor, very low income people in the US, the default rates could be a major problem going forward.

I watch with interest from the sidelines, i never got it, from the beginning.

 

[barney]

Only just noticed this thread … Great pick @So_Cynical ….. be your shout wouldn't it

 

[bigdog]

Great day for APT after ASX announcement today

19/07/2018 10:59:16 AM 8

Business Update
https://www.asx.com.au/asxpdf/20180719/pdf/43wmpkgfxs0v2m.pdf

AFTERPAY TOUCH GROUP LIMITED
(ASX: APT)
Business Update
(all currency figures are in Australian dollars unless otherwise stated)
19 July 2018
Afterpay Touch Group Limited (ASX: APT) (Afterpay or the Company) is pleased to provide a business update for the three-month period ended 30 June 2018 (Q4 FY18) and the financial year ended 30 June 2018 (FY18):

▪ Over $2.18bn of total underlying sales processed through the Afterpay platform in FY18 (289% increase over FY17)

▪ Q4 FY18 underlying sales of approximately $736m represents a 171% increase over Q4 FY17 and a 39% increase over Q3 FY18

▪ Approximately 16,500 retailers and approximately 2.2m customers currently live and transacted on the Afterpay platform since inception

▪ A strong start to Afterpay’s U.S. business since launching in mid-May 2018 (over $11m of underlying sales in the first full month, June 2018). Over 400 retailer contracts signed and over 200 retailers currently transacting on the platform, including major millennial focused brands, URBAN OUTFITTERS (live since 16 May 2018) and REVOLVE (live since 9 July 2018)

▪ Significant new enterprise retailers and service providers continue to sign-up to Afterpay in Australia including BOOHOO, BING LEE, MITRE 10 and DIESEL, in both traditional retail categories and new vertical expansion categories such as health, beauty and entertainment with a strong future pipeline

▪ Afterpay in-store is building momentum. Approximately 10,000 individual shopfronts are now live with Afterpay in-store

▪ Several senior, globally experienced team members joined the business in FY18 to support business expansion and core product and system development, particularly in the areas of risk, data and technology development

▪ Gross Losses and Net Transaction Losses trended down in Q4 FY18 and generally improved over H2 FY18, despite the increased underlying sales performance and merchant diversification in the same period. Consequently, a stronger Net Transaction Margin is expected in H2 FY18 compared to H1 FY18

▪ Previously announced product enhancements in Australia in relation to external ID verification and the capping of late fees have now been implemented in line with previous guidance. U.S. product enhancements will be configured progressively as further transactional data and experience is obtained

▪ Pro-active and voluntary engagement with all key industry stakeholders continues: government, regulators including ASIC, and consumer groups, to ensure the differentiated nature of the Afterpay service is clearly understood and to receive constructive suggestions for improvement

▪ Previously announced $200m warehouse receivables funding facility with major international bank (to sit alongside the existing NAB $350m warehouse receivables facility in Australia) continues to progress from term sheet towards final documentation

▪ The Pay Now businesses remain stable from both a revenue and margin perspective. A review of the European E-Services business is in progress

▪ Subject to audit, FY18 Group Revenue and Other Income is expected to be in the order of $142m, FY18 Group EBITDA is expected to be in the order of $33m to $34m and FY18 Group EBTDA is expected to be in the order of $27m to $28m, both prior to one-off and share based expenses but including the majority of expenses incurred in establishing and operating the U.S. business
The Afterpay Business in Australia and New Zealand Continued to Perform Strongly in Q4 FY18
Strong underlying growth and performance continued in Q4 FY18 with respect to all key metrics (unaudited):

Platform growth:
▪ Over $2.1bn of total underlying sales processed through the Afterpay platform in FY18 (287% increase over FY17)

▪ Q4 FY18 underlying sales of approximately $722m represents a 166% increase over Q4 FY17 and a 36% increase over Q3 FY18 and now tracking at over $3bn on an annualised basis based on recent monthly performance

▪ Platform growth is being driven by a combination of new customers (growing at an average of over 3,600 per calendar day in Q4 FY18), repeat customer activity, new retailers (consistently on-boarding between 600 and 1,000 new businesses per month), increasing share of retailer check-out and adoption of Afterpay’s in-store proposition by existing multi-channel retail partners
▪ Today, it is estimated that Afterpay processes more than 10% of all physical online retaili in Australia and over 10% of the purchasing Australian populationii has transacted with Afterpay since inception

 

[kid hustlr]

Incredibly well performing share.

Am i skeptic for thinking the fact that something like this is getting used so much is a worrying sign in the long run?

 

[So_Cynical]

Big day for me, 2 stocks up 32% what are the chances of that, anyway many said the 2 Billion valuation was over the top, 2.4 Billion is plain crazy.

 

[McLovin]

Big day for me, 2 stocks up 32% what are the chances of that, anyway many said the 2 Billion valuation was over the top, 2.4 Billion is plain crazy.

It's $3b.

 

[bigdog]

APT up $2.55 this morning and now $16.08 at 10.20 AM

286

 

[galumay]

The smell of FOMO is like napalm on a still morning

 

[So_Cynical]

It's $3b.

LOL yes what a difference a day makes..

 

[McLovin]

LOL yes what a difference a day makes..

True that!

It's going parabolic and you only need to go over on to the other place to see FOMO (as Gal correctly calls it) maxing out. No doubt the inroads they've had in the US have been impressive for just over six weeks, but it is just over six weeks. There's only blue sky baked in now.

 

[bigdog]

Hit all time high of $16.19 and finished @ $14.38

Traded value $100 million for 6.7 million shares

 

[So_Cynical]

Afterpay is a credit card disrupter.

A credit card costs the holder to use, interest, annual fee, late fees and any merchant fees that are passed on, Afterpay doesn't cost the consumer anything and requires the retailer to pay like 2% or so, they are/have/will take market share from credit card company's.

The credit card industry has been around since the 70's (remember bankcard?) operating pretty much unchanged, growing year after year, and now change has come and its Afterpay leading the charge.

 

[Knobby22]

Interesting view point with some truth. We can expect some blowback from the credit card companies who will use their control of Congress to attack this start up especially as it is Australian. Some risks ahead.

I have now nearly doubled my money but really can't value this company. There are a lot of opportunities and threats.

 

[McLovin]

Afterpay is a credit card disrupter.

A credit card costs the holder to use, interest, annual fee, late fees and any merchant fees that are passed on, Afterpay doesn't cost the consumer anything and requires the retailer to pay like 2% or so, they are/have/will take market share from credit card company's.

Afterpay is only free if you pay on time the same as a credit card, otherwise the fees are pretty steep. Afterpay Merchant fees are similar to Amex, and higher than credit card fees. There are plenty of no annual fee credit cards.

The big advantage, imo, is it's instant and circumvents a credit check. It's more convenient that a traditional credit card for that reason. Who knows how well that will hold up in a recession.

 

[greggles]

The big advantage, imo, is it's instant and circumvents a credit check. It's more convenient that a traditional credit card for that reason. Who knows how well that will hold up in a recession.

I think it will hold up very well in a recession. It will enable those under financial pressure to continue to purchase higher ticket items and to have the cost of those items spread over four payments with no interest payable should the scheduled payments be made on time.

A $1000 purchase then becomes four $250 payments which can be managed easier in times when personal savings might be at a minimum. It may end up being a trap for the financially irresponsible but as a source of free credit it is an appealing option for those with little cash in the bank.

 

[McLovin]

I think it will hold up very well in a recession. It will enable those under financial pressure to continue to purchase higher ticket items and to have the cost of those items spread over four payments with no interest payable should the scheduled payments be made on time.

A $1000 purchase then becomes four $250 payments which can be managed easier in times when personal savings might be at a minimum. It may end up being a trap for the financially irresponsible but as a source of free credit it is an appealing option for those with little cash in the bank.

I'd argue someone who requires time payment services already has low savings. That's confirmed when you see the demographics of the average APT and Z1P user; young women, not a demographic associated with high rates of savings. If they were to lose their job, do you think they'll be making their time payments for the $1,000 of clothes they just bought on The Iconic or paying things like rent and food? Bad debts will explode for a company like this. These guys need two things, fast payment so they can churn their lending book and keep collecting merchant fees, and low bad debts, because their return on capital isn't that amazing.

 

[notting]

In my dictatorship any woman buying more than $1000 of cloths in a day will be shot in head