APT - Afterpay Limited

[basilio]

Afterpay is fascinating...
Yep their sales are exploding. and yep their ongoing losses are also rising steeply.

The owners have made out like multi billion dollar bandits and neatly managed to sell at a very handsome price .

Couple of good stories on the current situation and how they managed to pull everyone together to create this spectacular success. Frankly it reminds a lot about Babcock and Brown or going back further Bernie Cornfields of IOS fame.

It's the $39 billion company that's never made a profit, and its losses just got bigger

In its latest release to the ASX, Afterpay reveals a $156.3 million net loss, 689 per cent worse than its 19.8 million loss last financial year, with rival Zip reporting an even bigger deterioration in its bottom line. Success, it seems, comes at a cost.

www.abc.net.au

'The secret fairy dust' that helped Afterpay go from zero to $39b in Australia's biggest ever corporate takeover

Afterpay's Anthony Eisen and Nick Molnar have taken the group from zero to $39 billion in just six years but it hasn't been an easy ride.

www.abc.net.au

Investors Overseas Services (I.O.S.) - Huge 1960's Fraud - Bernie Cornfeld and Robert Vesco

Investors Overseas Services (I.O.S.) - Huge 1960's Fraud - Bernie Cornfeld and Robert Vesco

scripophily.net

 

[galumay]

The owners have made out like multi billion dollar bandits and neatly managed to sell at a very handsome price .

They must be pissing themselves laughing, losses accelerating massively, outgoing operational cashflow doubling, margins compressing, bad debts rising, every meaningful financial metric going the wrong way - all as the business grows in scale!! Finding Square was like finding their own Alan Bond!

 

[makteb]

They must be pissing themselves laughing, losses accelerating massively, outgoing operational cashflow doubling, margins compressing, bad debts rising, every meaningful financial metric going the wrong way - all as the business grows in scale!! Finding Square was like finding their own Alan Bond!

What they have created is a brand... AFTERPAY.
First to market.
They are selling that brand, the infrastructure of their model, the customer base and potential blue sky.

From a global perspective, they did a great thing for Australian fintech.

At the end of the day , the market will do what it does, our task, is to collect the XX% and cut our loses.

 

[Dona Ferentes]

looking like a done deal, and holders need to make a decision. A couple of fund managers have their say:

Matthew Kidman (Livewire Markets) : The next one is not a surprise because it’s been a remarkable story. In fact, I’m reading a book about it called Buy Now Pay Later – that’s how special the company’s been. Afterpay. It’s unusual because it has got a takeover offer from Square and it’s going to disappear from the Australian landscape. Do we hold onto it, or do we sell? Chris, let’s go with you; Afterpay.

Chris Stott (1851 Markets) : Hold, Matthew. Nick and Anthony have done a terrific job since the IPO, and it's a tremendous achievement to secure the deal with Square. We would say people should hold, and then roll into the Square offer. Hold the Square shares if you can. We think certainly with them as a partner now that they have got significant capital firepower behind them to really drive their next level of growth over the medium to longer term. So hold.

Matthew Kidman (Livewire Markets): It is a big jump, James, to go with Square. Obviously, they have got a good payment system, they are very big in the US. But they like to trade around in Bitcoin as well, so it is an exotic company to join. Buy, hold or sell?

James Gerrish (Market Matters): I would be holding it if I held Afterpay at this point in time. Obviously, the next 12 months are going to be all about integration, so putting the Afterpay business into the Square ecosystem and trying to get a really strong level of growth coming out the other side. For my money at the moment, I would be a buyer of Zip Co (Z1P), in the buy now pay later space. I think that has got more upside in the short term.

But I think the other key thing in BNPL at the moment is the validation that we have seen from Square coming in, as well as Amazon doing a deal with Affirm. So, those two things have really validated the sector. So for me, it's here to stay, and I would be a holder of Afterpay, but a buyer of Zip.

 

[Dona Ferentes]

SQUARE INC.

Listing date	7 January 2021 11:00 AM AEDT ##
Company contact details	https://squareup.com/au/en Ph: +1 (415) 375-3176
Principal Activities	Square is a global fintech company. It builds tools that aim to empower businesses and individuals to participate in the economy.
GICS industry group	TBA
Issue Price	N/A
Issue Type	CHESS Depositary Interests
Security code	SQ2

 

[Dona Ferentes]

APT perilously close to $100.00 as my Royal Quiet Deluxe clunks away

Afterpay will postpone the shareholder meeting that was to approve its acquisition by Square, citing a delay with regulatory approval by the Bank of Spain. Its stock fell by almost 5 per cent as the market opened.

Separately, Square said it will change its name to Block.

 

[Ann]

I wonder if Jack is getting cold feet?

Jack Dorsey’s Square Is Now Block

Payments company Square has a new name befitting its CEO's blockchain obsession.

www.wired.com

 

[Dona Ferentes]

I wonder if Jack is getting cold feet?

Some sellers from when the run happened would be happy. (nearly 10 million changed hands at $130)

Square said its organisational structure and operating model will remain the same.

Many Australian investors are attempting to understand Mr Dorsey’s company because when the Afterpay deal completes, Block shares will trade on the ASX.
The Square name will be maintained for the “Seller” business, which provides an e-commerce software and banking services for merchants. The company said the new corporate name “allows the Seller business to own the Square brand it was built for”.
Afterpay will sit between the Square and Cash App divisions of Block. Afterpay will not be its own business unit but the Afterpay teams will be integrated into both the Square and Cash App businesses.

Afterpay and Square said they still expect the deal to be competed in the first quarter of calendar 2022, its existing timeline.

Both companies said they are considering options to proceed with a scheme meeting before the end of the year, but it may be delayed “until the new year”.

Analysts said they did not expect the delay to impact on the closure of the deal.

“We continue to believe the risks of the transaction closing are minimal,” said RBC Capital Markets analyst Chami Ratnapala.

Square shares fell by 6.6 per cent to $194.50 in New York on Wednesday. Shares in Afterpay were down 5.3 per cent at $100.84 after an hour of trading on Thursday.

Square’s share price and by extension that of Afterpay has been caught up in a sell-off of high growth low profit tech stocks, having plunged around 20 per cent in a month.

Square has lost a third of its value since its share price peak of $289 on August 5, days after the acquisition was announced.

But the spread between the Afterpay share price adjusted for currency levels and the agreed conversion ratio, and the Square share price has remained close to zero. That suggests traders believe there is little to no risk that the transaction won’t complete.

 

[Ann]

But the spread between the Afterpay share price adjusted for currency levels and the agreed conversion ratio, and the Square share price has remained close to zero. That suggests traders believe there is little to no risk that the transaction won’t complete.

Thank you @Dona Ferentes that is very interesting, almost beyond my comprehension coping with a double negative after two glasses of bubbly, but got there in the end! My takeaway from what you say, it is gonna happen.
Looking at the chart I think I would be a touch leery but I have been wrong about APT in the past.

 

[Dona Ferentes]

@Ann for me, red wine aids the judgment. ?

The only skin I have in this game is my friendship with two mates; one bought under $20 and the other at $100. Not giving advice, I thought a bit of diversification would be in order (held in SMSFs)

 

[makteb]

Thanks for the updates @ Dona & @ Ann

 

[Miner]

Interesting for both APT and ZIP or many BNPL to join the queue ?
US regulators probing Afterpay and Zip over buy now, pay later consumer protections

US regulators probing Afterpay and Zip over buy now, pay later consumer protections

Australian companies Afterpay and Zip are being probed by US regulators over their consumer protections, as the buy now, pay later sector booms and concerns grow about customer debt.

www.abc.net.au

 

[Miner]

Interesting for both APT and ZIP or many BNPL to join the queue ?
US regulators probing Afterpay and Zip over buy now, pay later consumer protections

US regulators probing Afterpay and Zip over buy now, pay later consumer protections

Australian companies Afterpay and Zip are being probed by US regulators over their consumer protections, as the buy now, pay later sector booms and concerns grow about customer debt.

www.abc.net.au

BNPL bloodbath: Sector sells off again after US regulators flag more oversight - Stockhead

The CFPB said on its website that it was particularly concerned about the impact BNPL providers have on the accumulation of consumer debt.

stockhead.com.au

 

[Dona Ferentes]

and AfterPay as low as $72 a share today ... the excuse: spooked by the Fed.

Square peg in a black hole

 

[Wedgy]

A company which is not making a profit is worthless, unless the expectation is that they will make a profit in the future and that is what the SP is based on, future profits. Problem is I am not sure if APT will ever make a profit, if they don't BNPL will go down in history as another dotcom bubble burst, my opinion only, DYOR.

Have traded APT regularly in the past, first bought in Jan 2018 at $7.22 and last sold early 2020 at average about $35 and never bought back in, oops, but no regrets made a healthy profit every trade.

 

[Ann]

Vanguard and Blackrock, have been buying and selling this like no one's business over the last few months. Not suggesting they would have had a coordinated manipulation of the price in any way (she says sarcastically ?).

They are both out now but I just bet they are shorting this like a mad thing but staying under the radar by holding less than a reportable percentage.

Anyway, certainly, a boy in shorts wet dream happening here.

 

[Ann]

...and this is what I was looking at on the Westpac site under shareholders, I didn't do any close-up and personal investigation in the announcements.

 

[KevinBB]

I'm guessing here ... but the majority of those share sales and purchases would be reported because of the reduction in WBC's market cap over the past 6 months, compared to other large stocks, and the resulting daily adjustment inside the ETFs that BlackRock manage.

The telling statistic for me is that, prior to today's drop, the XTL index is still more than 4% below its August highs, compared to XJO's 0.88%, mainly because of the drop in Westpac's price, and now Afterpay's price, over the past 6 months (from memory) or so.

Figures as of yesterday's close.

KH

 

[rnr]

Vanguard and Blackrock, have been buying and selling this like no one's business over the last few months. Not suggesting they would have had a coordinated manipulation of the price in any way (she says sarcastically ?).

They are both out now but I just bet they are shorting this like a mad thing but staying under the radar by holding less than a reportable percentage.

Anyway, certainly, a boy in shorts wet dream happening here.

Hey Ann,

I seem to recall that you made a post recently stating that you liked island reversals!

Cheers, Rob

 

[Ann]

Hey Ann,

I seem to recall that you made a post recently stating that you liked island reversals!

Cheers, Rob

I cannot tell you how pleased I missed these five Island bottoms, Rob. I previously mentioned this over in my KISS thread in the trading journals section. Although right from the start the chart looked more like a trader's toy than a genuine business. It is not a stock I have ever contemplated or watched. It always looked like a high priced pump and dump to me.

I can only imagine how many people must have been caught up as it isn't a rare or unheard of chart pattern. It can only leave a really bad taste in many folk's mouths. What is the saying "fool me once, shame on you, fool me twice shame on me." Fool me five times and I will hate you forever and never forget. That last bit was my make up!

...and the chart of APT I had previously put up on KISS...