APT - Afterpay Limited

[galumay]

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

I think you are right to an extent, its a small competitive advantage, the name has created a strong brand. The danger I see is existing players with strong brands, Visa, Mastercard, Paypal etc offering the same service for a lower fee to merchants. I can also see competitors offering longer terms like 6 weeks - at the end of the market APT service that will be very attractive.

First mover/disrupter advantage is a funny thing, it quite often doesnt play how you expect in the longer term.

 

[Smurf1976]

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.

That’s my thinking definitely. The brand name seems to have immediately become entrenched as the term to describe the product, to the point that I doubt many could actually refer to it at all in generic terms without using the word Afterpay.

 

[So_Cynical]

APT is priced for potential and has been since $4.50 at one point a few months back it was trading at a higher multiple than Amazon so someone said, Visa, Mastercard, Paypal etc will buy APT because they would be crazy not too, just crazy not too, its that simple.

 

[barney]

Know nothing about this one but technically the current bleeding should .... and will need to reduce around $11 you'd think …. SP much under that could indicate possible issues we average punters aren't aware of??

Just a random observation and with no foundation in the possible fundamentals of the Stock so forgive me if I am totally incorrect as that is a regular occurrence

 

[Knobby22]

I bought some more at $10.88. Proud of that buy as near bottom. Wish though I had of sold some at $24. Almost did but distracted at work.

I think price will keep rising over the summer.

 

[bigdog]

ASX announcement reported today has kicked the SP up

8/11/2018 9:30:48 AM Business Developments

 

[bigdog]

I own APT shares and signed up for the APT APP and have not yet used
-- $400 limit
-- Was given choice of paying by bank account or credit card!
-- Credit card payments could be big concern for consumer law where purchases are reimbursed by bank and additional purchases are allowed to continue.
-- Buyer is unable to make payment for credit card charges and interest accumulates
-- Is my understanding correct?

Received email today advising Dentists now signed up

 

[Ellen Green]

So far, the price is in the range of 10.87- 15.58. Moving average 5-day, 20-day, 100-day and 250-day are rising. RSI(14) stands at 50.2.

 

[barney]

technically the current bleeding should .... and will need to reduce around $11 you'd think …. SP much under that could indicate possible issues we average punters aren't aware of??

Fortunately behaving since the above observation …… Chart is definitely healthier than it was but a bit more time required to totally eliminate any potentially unwell Cats

 

[bigdog]

I attend the APT AGM meeting in Melbourne yesterday

Very slick presentation from Afterpay executive chairman Anthony Eisen which is available as ASX announcement (the ASX announcements were posted at meeting and meeting started after completion)

28/11/2018 12:12:11 PM 2018 AGM Chairman & Group Head Presentation (56 pages)

Adoption of Remuneration Report was 20.3% against

All other resolutions were carried in 90+%

The SP kicked on today following report form ASIC

https://www.theage.com.au/business/...ge_busnews_am&instance=2018-11-28--19-31--UTC

Time to pay? Aussies owe more than $900m on Afterpay-style services

Christmas came early for the burgeoning buy now pay later sector and its market darling leader Afterpay Touch after the corporate regulator confirmed that its desire to tighten rules would not see it require the companies to act like credit card or loan issuers.

The Australian Securities and Investments Commission (ASIC) on Wednesday issued a keenly anticipated report on the sector showing two million people now use its services with those customers owing more than $900 million as of the end of June.

In a key finding, ASIC did not recommend that the sector be brought under the National Credit Act, which would compel companies like Afterpay to take steps to ensure the credit it provides is not unsuitable for consumers.

This is despite concerns from some consumer groups about an explosion in the use of buy now pay later services particularly with millennial customers many of whom are students who are in part-time employment or unemployed.

Instead, the regulator would like to see its mooted product intervention powers – where it can step in to prevent the sale of products – expanded to include buy now pay later providers.

ASIC said around 44 per cent of buy now, pay later customers had an income of less than $40,000 a year and there were already indications of a real risk that such commitments could contribute to financial over-commitment by users.

"We found that buy now pay later arrangements can cause some consumers to become financially overcommitted and liable to paying late fees," said ASIC commissioner Danielle Press.

ASIC also found the providers used "behavioural techniques" to get people to make purchases without carefully considering the costs and that one in six users had either "become overdrawn, delayed bill payments or borrowed additional money because of a buy now pay later arrangement".

Eleanor Brown, 27, is one millennial who uses Afterpay. She works full time, lives out of home and is repaying her HECS debt. She's never owned a credit card but spends up to $120 per month on purchases that fall outside of her monthly pay cycle.

“This time of year especially, my online spending has gone up,” she said. “Afterpay allows me to live above my means.”

Ms Brown has nothing but praise for the service but worries for less responsible users.

This time of year especially, my online spending has gone up. Afterpay allows me to live above my means.

“Once I had a payment rejected but I was notified immediately and they said if I paid by the end of the day I wouldn’t get a late fee. A lot of my friends and colleagues use Afterpay and we’ve never had a problem with it. Maybe someone’s who’s freshly 18 who might go a little bit more crazy.”

Afterpay executive chairman Anthony Eisen.Credit:Elke Meitzel

Around 24 per cent of Afterpay's revenue last financial year came from late payment fees charged to its customers.

"Our revenue model is based on retail partners, not on customer debt. We are not like these other companies and that's been a core value from day one," Afterpay executive chairman Anthony Eisen told investors at the company's annual general meeting on Wednesday.

"There's a whole load of stuff that we do that we don't announce that's related to profiling customers to reduce gross losses and defaults."

Afterpay has introduced a cap on late fees at $10 for purchases under $40 and a maximum of $68 for other purchases. If an Afterpay user defaults on a repayment, their account is suspended.

"The important thing for us is to continue working very closely with Australian lawmakers to explain who we are and what we do," said Mr Eisen.

Two of Afterpay's rivals, Zip Pay and Flexipay, also welcomed ASIC's decision.

The sector still faces a level of regulatory uncertainty with a Senate inquiry underway into buy now pay later businesses alongside payday lenders and debt management firms.

 

[sptrawler]

Who underwrites the defaults bigdog?
Or is the debt carried by the merchant at the point of purchase?

 

[Toyota Lexcen]

Afterpay pay merchant.

Afterpay refunds merchant if a return is made .

Very grey area.

Afterpay buys good, then let's you pay it off. Is it credit?

 

[Knobby22]

Afterpay pay merchant.

Afterpay refunds merchant if a return is made .

Very grey area.

Afterpay buys good, then let's you pay it off. Is it credit?

Officially ruled by ASIC to not be credit as posted above. It's more like a debit card with delayed payment. In fact it allows people to avoid credit cards and all the traps they set.
Read the following from the Chairman.

I think it’s important to explain this element of our competitive advantage in more detail as it really is fundamental to our story. Under our business model:


▪ Afterpay’s revenue is based on merchant fees, not on customer debt

▪ We do not make our profit from customers and users

▪ We make more money when customers buy what they can afford, pay on time and stick to their simple instalment plan

▪ When our customers get into trouble, we lose money

This means that for Afterpay, things like responsible spending are more than words. They are fundamental to the success of our business. And this means that we could not be more different to traditional credit products. It’s this difference that has helped us to build trust with our customers, and trust with our retail partners.

And we back this up with our actions.

If we get it wrong, and a customer misses a payment, they cannot use Afterpay again until they settle their account with us. Could you honestly imagine a traditional credit company stopping you from buying anything else or going deeper into debt because you missed a single payment and didn’t pay off discrete items in full?

These are unbreakable rules of our model, our community and our business. These unbreakable rules prioritise customer payment responsibility.

And everything we do incentivises our community to adhere to these rules:

▪ Afterpay is a free service for customers who pay on time

▪ Customers must pay purchases off in full in a short time period – its about budgeting and buying to "own" and not "rent" – you can’t "kick the can down the road" with Afterpay by way of paying us a fee or otherwise

▪ Afterpay is for discrete purchases – not a line of credit

▪ Customers are suspended if a single payment is late – that means bad debt cannot accrue or revolve - and we intervene as early as possible in the debt cycle to stop people getting deeper into trouble

▪ Similarly, late fees – if charged, are minimal, capped and don’t accumulate

▪ And, strict spending caps that start low for first time customers and increase only with demonstrated positive behaviour - and even then the maximum individual purchase limit is capped at $1,500

We know that these rules and incentives work because the data reinforces this point:

▪ Overall Afterpay rejects around 30 percent of the purchase requests we receive.

▪ Approximately 95% of payments received in FY18 did not attract a late fee

▪ Over 90% of monthly transaction volume comes from returning Afterpay customers, which is only possible if these customers use the system responsibly and their payments are up to date.

▪ And over 85% of our customers prefer to pay with debit cards rather than credit cards

Furthermore, our average transaction values and balances outstanding are low:

▪ Our average balance outstanding is just over $121, compared to average Australian credit card debt of over $4,000

▪ Of those customers that have positive balances outstanding >90% of them are less than $500; And

>75% are less than $350

2.5 million customers, over 20,000 retail partnerships and they are attracting the attention of the biggest and most recognised regional and global brands every day.
The latest results in the USA are exciting and 10% of all Australians now use the service with 10% of all online sales now through Afterpay.

The Afterpay customer growth rate in the U.S. has jumped in the last month, from an already rapid rate. In November, Afterpay U.S. is set to add ~140,000 new customers, which compares to the ~70,000 added in October in that market.

I am officially* going to state that this is Australia's best tech start up in history. Last chance to catch the train before it leaves the station forever.

(*in my position of over exuberant poster of the decade as voted by me)

 

[Toyota Lexcen]

Asic/government probably have no "laws" to stop it.

It's fascinating, afterpay buy the item, give it to customer, then allow it to be paid off.

Are they in the clear because they don't charge interest?

 

[peter2]

I like that the APT CEO is being proactive and responding quickly to the possibility of a Senate inquiry into this industry.

I'm continually amazed that there's not been more criticism of the outrageous credit card interest rate (18%) that's been around for ever. Have the banks successfully stifled any criticism?

 

[Knobby22]

I like that the APT CEO is being proactive and responding quickly to the possibility of a Senate inquiry into this industry.

I'm continually amazed that there's not been more criticism of the outrageous credit card interest rate (18%) that's been around for ever. Have the banks successfully stifled any criticism?

It would definitely be in the banks interest to try to get the government to crimp Afterpay however why would the Government want to piss off Gen Z who use it most?
Though Liberal and Green politicians might like to as they both seem to be in suicidal mode at the moment.

 

[Toyota Lexcen]

Why would banks be against Afterpay?

 

[Knobby22]

Why would banks be against Afterpay?

Their aim is to get the young onto Credit Cards and expensive debt. They also miss out on the transaction payment if people don't use their Credit Cards.

I have 4 nieces that use Afterpay and don't have credit cards. My daughter also doesn't have a cc.
( I have 6 nieces, one is still very young, guess what - one of the 6 is in CC debt.)

 

[bigdog]

These directors get it easy!!

ASX ANN 6/12/2018 4:30:10 PM Change of Director's Interest Notice (David Hancock)

Sold: 550,000 for $7,902,130 in aggregate for sales of Shares (before brokerage)
Nil paid for acquisition of Options

Acquired: 2,699,087 unlisted options issued under an agreement with David Hancock, with an exercise price of $2.70 per option and expiry date of 1 September 2022, and other terms as approved by shareholders at the Company’s 2018 Annual General Meeting (Options)

Number held after change:
Indirect:
1,350,000 Shares

Direct:
2,699,087 Options
200,000 unlisted options issued under the entity’s Employee Option Plan, with an exercise
price of $1.00 per option and an expiry date of 31 December 2020.

 

[MrChow]

So if I had decided to start a lay-buy company 4 years ago I could be worth 3 billion dollars?

That doesn't seem right.