APT - Afterpay Limited

[peter2]

Strange that there such a big scale back when the shares are much cheaper to buy in the market.
edit: I suppose the company can't buy them in the market to sell them at the SPP price and avoiding any scale back and raise a bit more profit.

 

[bigdog]

I imagine subscribers to SPP will get 68% of what they paid up to $15,000 max.

$25 million divided by $36.8 million paid is 68%

I could imagine some smart folk wanting to bailout with their cheques not being cleared!!

 

[bigdog]

Age reported today:

Goldman Sachs continue to believe that Afterpay Touch will grow in the US despite threats of increased competition in the market. Square, Inc. recently announced that merchants could offer loans to customers to pay for large purchases using its payments platform.

Digital payments company Affirm also offered its customers the option to make purchases that could be paid in instalments, although this was only a promotional offer and the company otherwise operates like a credit card issuer.

Despite the increased competition, the broker believe that Afterpay remains differentiated in its offering and has a clear strategy in the US.

Goldman Sachs maintained its buy recommendation on Afterpay, and maintained its 12-month target of $26.15, a 47.7 per cent premium to its Friday closing price of $17.70.

 

[Wysiwyg]

I noticed in my last week of online shopping that AfterPay is offered on many sites now. Lay buy has taken an in-your-face turn.

 

[Sdajii]

I noticed in my last week of online shopping that AfterPay is offered on many sites now. Lay buy has taken an in-your-face turn.

I've seen friends in my Facebook feed talking about Afterpay and excitedly sharing commercial pages which advertise that they're on board with Afterpay. Just a minute ago a friend (Facebook friend, someone I scarcely know) shared the EBGames page announcement that they are with Afterpay and is excitedly posting that he's going to buy stuff from them. It is becoming very heavily talked about. Last time I was in Australia (earlier this year) I hadn't even heard of Afterpay. I'll be visiting Australia in a couple of weeks and am interested to see how much passive exposure I get to it. I'll be travelling to VIC, NSW and QLD and will go to shopping centres and talk to friends in all three states, and while it's not a service I'd ever actually want, I'm curious about the procedure so I might buy a pair of shoes or something on it while I'm in the country.

 

[peter2]

After the current "bloodletting" I think it's worth noting that APT is rallying before others.

 

[peter2]

This is the pattern I'd wait for if I was a short term cfd trader.

It's possible that we may not get the HL before starting higher.
It's also possible that the market sells off again and price goes lower, through this minor support level.

 

[bigdog]

Afterpay, payday lenders and 'debt vultures' to face Senate inquiry

Price at 3:39 PM today

https://www.smh.com.au/business/ban...s-to-face-senate-inquiry-20181016-p50a1b.html

Payday lenders, debt management firms and Afterpay will be the subject of a new Senate inquiry into parts of the finance sector that have escaped the scrutiny of the Hayne royal commission.

After a year of scandal for the country's biggest financial institutions, Labor has proposed the new inquiry into parts of the financial world that are often slammed by consumer advocates, and are either unregulated or subject to much less regulation than banks.

The Greens, independent Derryn Hinch and Centre Alliance senators Rex Patrick and Stirling Griff threw their weight behind the inquiry on Wednesday, guaranteeing it would have the votes to pass the Senate.

Under proposed terms of reference, the inquiry would look at the regulatory environment surrounding payday lenders, consumer leasing businesses, and what consumer group critics refer to as "debt vultures".

These are businesses such as debt negotiation firms or credit repair agencies, which are unregulated and target customers with debt problems, or those struggling to get finance from conventional sources.

Buy now, pay later schemes such as Afterpay - which consumer groups say exploits a loophole in lending laws - would also be put under the microscope.

Shadow financial services spokeswoman, Clare O'Neil, said the Opposition wanted to stop people entering a "spiral of debt" from expensive payday loans, and the inquiry would look at the financial counselling sector's capacity to service this part of the community.

“I have been speaking with Australians around the country who are victims of misconduct by financial service providers," Ms O'Neil said.

"It is clear to me that there are a range of providers whose conduct was not examined by the banking royal commission who provide financial services to vulnerable Australians."

Gerard Brody, chief executive of the Consumer Action Law Centre, said clients frequently had problems with multiple payday loans. Debt management firms often charged exorbitant fees, he said, and were subject to no regulation.

"If you think the banks, insurers and superannuation funds are ripping people off, they are nothing compared with the exploitative conduct of this sector of the marketplace," Mr Brody said.

Afterpay, which is not subject to responsible lending laws and has taken off in popularity, would also be examined, alongside work the Australian Securities and Investments Commission is doing in this market.

Mr Brody said it appeared that more customers were contacting the National Debt Helpline about Afterpay.

Fiona Guthrie, the chief executive of Financial Counselling Australia, said payday lenders and debt negotiation providers were a significant cause of problems for customers who sought the help of a financial counsellor. These tended to affect lower-income customers the most, she said.

Customers of buy now, pay later services such as Afterpay were also starting to raise some concerns to financial counsellors about this type of credit, Ms Guthrie said.

"If the royal commission has shown us anything, it's that we should not have harmful financial products," she said.

The inquiry comes as the Coalition is accused of sitting on its hands over legislation expected to tighten regulations on the industry.

The Turnbull and Morrison governments have made little progress in 1000 days since the Small Amount Credit Contract and Consumer Lease Reforms bill was first flagged. It sought to introduce a cap on leases equal to the base price of the good plus 4 per cent a month and only allow leases and short-term loans to account for 10 per cent of a customer's net income.

Former assistant treasurer Josh Frydenberg first released the terms of reference for a review of the legislation in August 2015. Four ministers over the course of 1046 days have had carriage of it since .

Stuart Robert, the new minister in charge of the sector, has been contacted for comment.

Greens Treasury spokesperson Peter Whish-Wilson said he welcomed Labor’s bid for a payday lending inquiry but hopes they are genuine about reform after Labor leader Bill Shorten watered down regulations for the industry when he was financial services minister.

"We certainly support an inquiry and we are going to make sure that it goes beyond politics and actually getting some solid reforms in place," he said.

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[MarketMatters]

This will be interesting to watch!!!

 

[peter2]

My short term opportunity in APT just got smashed by a politician. Thanks for the notice @bigdog

 

[galumay]

Well it was a material risk that had been present since the business model was first outlined. Its one of the main reasons I sat out in the sidelines and watched as others rode the wave! It was only ever a question of when, not if.

 

[Sdajii]

I sold out about two weeks ago when support was being tested (good move!). The chart was absolutely ripe for something like this, and today's nothingburger of a news article triggered it. I bought all my shares back in at close.

Still a bit risky, there wasn't a lot of time between the crash and close to make the analysis of whether it was likely to crash through another layer of support or bounce back up, but I decided to jump in.

I doubt very much that this piece of 'news' represents anything which will legally harm APT at all. If anything it will help by restricting some of the competition, leaving APT a larger potential market, since I really can't see APT doing anything which any regulator would want to stop, but sentiment both of the market in view of this 'news', and the technicals, and also sentiment of retailers considering getting on board could be effected.

Technically, I can't predict what should happen tomorrow. The chart isn't strongly telling me anything, except that it's likely to move strongly one way or the other.

 

[Knobby22]

CCP Credit Corp got slammed also.

 

[aus_trader]

CCP Credit Corp got slammed also.

I also just looked like if anyone was spared in this short term lending space and looks like only 1 was left alone.

Stocks that had a bad day include CCP, MNY, CCV, APT and Z1P. Somehow the Radio Rentals operator, Thorn grp (TGA) was spared. This is perhaps because TGA were subjected to so much scrutiny already by investigators for this type of lending practices that price has already fallen so far from the ~$3 highs to the current 60c levels already.

I have had a fair bit of involvement with this sector of the market having had both Cashie's (CCV) and APT's nearest competitor Zip (Z1P) in the Speculative Stock Portfolio

The investigation will be followed with interest as detailed by bigdog, since it could really transform or choke this part of the lending market. I'm not taking any sides because it's a really complex issue: on the one hand it's about letting the free markets to work itself out over long term (as in this case if you burn the customers eventually they'll go elsewhere) or let the politicians and regulators step in to protect the most financially vulnerable in our society.

 

[Sdajii]

It still looks very unlikely the inquiry will do any harm at all, and may even give APT a benefit.

Technically, in my amateur analysis, it's looking really good. A jump up from the closing price on the day of the irrational scare and then four days of trading in a very narrow range, leaving it set to move one way or the other. The chart really doesn't seem to favour the down side, and it seems set for a run whenever it is ready to take off.

The fundamentals are also looking good with more and more retailers getting on board, and the Christmas boom coming up. I hear Barbecues galore in Australia have just started offering Afterpay this week, and several salons/beauty services and dental mobs abroad are now offering it. I'll be in Australia later this week and look forward to checking out the situation at ground zero.

 

[galumay]

The fundamentals are also looking good with more and more retailers getting on board,

Thats not really "the fundamentals", based on the fundamentals its an extremely overpriced business, people are paying a high price based on the narrative which is that eventually profit and cash flow will catch up due to exponential growth and underlying scalability.

The narrative may play out or it may not, I have no skin in the game, and I certainly hope those who have bought the story are repaid with great long term returns, but its always worth remembering that in the longer term most of these sorts of high growth tech businesses fail to ever meet the expectations of the narrative. The exceptions are the Apples and others that have created long term sustainable and profitable businesses.

 

[Toyota Lexcen]

is Afterpay a payday lender?

when using Afterpay aren't you paying the instalments with credit card, debit card, bank account etc?

you buy goods, Afterpay pays business then you pay Afterpay in 4 instalments with credit card, debit card, bank account etc

 

[galumay]

is Afterpay a payday lender?

No they are not a payday lender, I think they get lumped in with them a bit because its attractive to low income people with poor saving habits. There is a real concern about the potential negative impact on vunerable people. I guess like any new business that is structurally different to existing businesses, its likely to attract some attention from regulators/legislators. Whether that leads to any negative impact on the business or not is a risk any potential investor has to weigh up.

 

[Smurf1976]

The fundamentals are also looking good with more and more retailers getting on board

My observation is that the company has already achieved "generic" status in this market.

If someone comes up with a direct competitor then they're going to face the problem that "After Pay" is already an accepted term. It's one of those things like Biro meaning any ballpoint pen etc.

Just my observation - it's already widespread so any direct competitor would need to do it better not just offering essentially the same thing.

 

[Sdajii]

Thats not really "the fundamentals", based on the fundamentals its an extremely overpriced business, people are paying a high price based on the narrative which is that eventually profit and cash flow will catch up due to exponential growth and underlying scalability.

The narrative may play out or it may not, I have no skin in the game, and I certainly hope those who have bought the story are repaid with great long term returns, but its always worth remembering that in the longer term most of these sorts of high growth tech businesses fail to ever meet the expectations of the narrative. The exceptions are the Apples and others that have created long term sustainable and profitable businesses.

Totally fair comment, you're entirely right.

What I meant by the fundamentals (yes, I termed it incorrectly) is that the business is continuing to expand, rapidly adding more and more retailers in Australia and abroad and total afterpaid sales are increasing. Yes, you're entirely right, it is still priced in with an assumption that it will end up larger than it is (which given its current rapid rate of expansion and including recent expansion into foreign markets is all but guaranteed), but absolutely, we're yet to see exactly how large it will get and it does need to grow more to reach the size the market cap suggests.

But in a nutshell, the technicals look nice, and the business operations and continued growth would seem to support a stable or increasing share price rather than a falling one.

Smurf: If I ask to borrow my friend's Bic pen by asking for his Biro, no one will sue me, but if I manufacture pens and brand them as Biros instead of Sdaji Pens, Biro is probably going to make my life very unpleasant. If competitors start using the term 'afterpay' we'll have their arses on toast for breakfast, and even if it enters public vernacular as a general term for any buy now pay later thing, we literally are the only one who can market with that name, so it works brilliantly for us! The name Afterpay was spectacular marketting, and simple as it is, makes things very difficult for competitors. That brand name alone will be worth a fortune, already must be.