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APT, AFTERPAY HOLDINGS LIMITED
nipper
post Posted: Aug 2 2020, 02:14 PM
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Most of the popular focus on Afterpay, which reports its full year results on August 27, and the other buy now, pay later stocks is on top line growth numbers. Revenue is a function of the size of the customer base and merchant network, driven by overall transactions made on the system and the average value of those transactions per user.

But more attention is focusing on the bottom line. Investors hone in on the net transaction margin. Essentially, this examines how much the company is making after bad debts, processing costs and funding costs are subtracted from the merchant and late fees revenue. It reflects that, like banks, buy now, pay later profits need to be offset by the customers who don't pay.
For now, generous government stimulus packages have been back-stopping bad debts and encouraging spending... so bad debt levels at Afterpay, Zip and the other players have remained low. Short repayment cycles and capped spending amounts for new customers help (users can get access to more credit over time after proving themselves).

In future results, investors should watch Afterpay's consumer adoption, gross merchant volume and revenue margins and form a view around where these metrics can grow to over the long term We favour Afterpay's simple and free instalment solution, which has a proven track record of rapid consumer adoption upon launch in new geographies, said an analyst

This land grab for global scale is forcing the main players into losses, which for now investors are willing to tolerate. They understand there are likely to be only be a few winners globally, and getting to scale requires serious investment in marketing, R&D and staff.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Jul 17 2020, 02:25 PM
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QUOTE
Livewire Markets: Jun Bei, your first one, first cab off the rank, the hottest stock on the market at the moment, Afterpay defying gravity; buy, hold, or sell?

Jun Bei Liu (Tribeca): It is a hold for me. Look, it was a buy, but certainly its share price has gone through the roof. We think the opportunity set is enormous for this company and they are only just touching the surface of what they could achieve .... 1 per cent penetration in the US and other markets. Now they are moving into raise huge amounts of money and they got the war chest to go and go after those market share, so it is a hold for me.



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Livewire Markets: Okay. Well, big market cap. They have executed flawlessly, huge capital raising, buy, hold, or sell?

Eleanor Swanson (Firetrail): It is also a hold for me. Afterpay has absolutely dominated the retail market in Australia and it looks like they are going to do the same thing in the US. However, we feel that is largely priced into the current share price. To get upside from here, I need to see Afterpay starting to roll out into new markets. I tend to try and value it market by market, and each new market adds about $6 to the current share price.

In addition, we think there is an opportunity for Afterpay to really go after marketing for these retailers and build out a marketing platform. To put that opportunity into context, they generated 10 million leads for US retailers in the month of April alone. They are not monetising that at the moment and we think that is a huge opportunity for the company. It is a comfortable hold.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Jul 8 2020, 11:39 AM
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https://www.afr.com/


Analyst views on the raising and update flooded in on Wednesday morning, as Afterpay shares hovered around $66.30 in early trade. The likes of UBS said the fresh equity wouldn't be enough to fund its growth and Macquarie concluded COVID-19 had accelerated the flywheel driving its growth.
Here's the rundown.

UBS
The Swiss bank analysts said the capital raising was supportive of the broker view on its capital intensive business model. They estimated Afterpay loan book was about $850 million at June 30 and if it were to growth to $52 billion by fiscal 2025, as in the UBS base case, then the size of its net receivables might increase to $3.8 billion.

In our view, APTs raising therefore is insufficient to fund the growth on its own, with further equity, warehouse or other debt funding required. Based on sell-side consensus forecasts, we continue to strongly believe the market is under-appreciating the APT's capital intensity.

UBS had a price target of $27.

Macquarie
The silver donut said the company's fourth quarter update showed that COVID-19 has accelerated APT's business in the short term, which ultimately benefits it for the long-term.

Afterpay booked $3.8 billion in underlying sales in the fourth quarter of fiscal 2020, a 127 per cent increase on the previous corresponding period and a 52 per cent uptick on the previous quarter. This reflects continued scaling of the business in all three markets, as well as a boost from the shift to a greater penetration of online sales during and as a result of COVID lockdowns. Afterpay's execution is strong across all three key markets, Macquarie said. The acceleration in growth during the current half bodes well for momentum in the years ahead, and for entry into new markets.

Macquarie has a price target of $70.

Morgan Stanley
Analysts at Morgan Stanley said Afterpays June quarter was rather impressive and its sales numbers were well ahead of the broker's and consensus forecasts. While we expect upgrades to consensus estimates, some of the good news is already in the share price with the stock re-rating to 25xFY21E revenues from 12x in February.

Morgan Stanley price target was $36.

Bell Potter
Bell Potter said Afterpay increasing its capital firepower was to turbocharge its pursuit of the market opportunity before it and to de-risk the business". "This raising makes sense, Bell Potter analysts said in a note to clients. In the last year APT has more than doubled its GMV to $11.1 billion and customer numbers to 9.9m, where the runway for further growth appears bright.

The broker said it saw further growth in the business being driven by higher customer numbers, increased frequency and further global expansion. It said it saw Europe as the next obvious expansion point or somewhere closer to home in South East Asia.

Bell Potter has a $81.25 price target.

Morgans
Analysts at Morgans said it was hard to find any real faults in APT's 4Q20 numbers. Sales had grown, alongside group customers and merchant numbers, while group revenue margin, net transaction margin and net loss ratio were all broadly stable on recent periods. It said the company capital raising was opportunistic after a strong share price run. Afterpay shares are trading up more than 115 per cent year-to-date.

While a concurrent founder sell-down ($250m) comes with the usual negative connotations (and only a ~5 month commitment to not sell further stock), the parcel sold is only 10% of their respective holdings with both founders maintaining sizeable stock positions (18.4m shares each). APT's momentum continues to be highly impressive, but trading on 37x FY20 revenue we see its valuation as fair and maintain our HOLD call.

Morgans has a $68.58 target price.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Jul 6 2020, 03:53 PM
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someone not believing the BNPL hype
QUOTE
A few days ago, I think it was 01 July, an equity analyst at the investment house, Citi, upgraded their price target on Afterpay (APT) to $64.25 from $27.10.

Don't you just love the $64 AND 25 cents from $27 AND 10 cents...what did John McEnroe used to say, you cannot be serious.

Next time just leave out the cents, you know it does not make any sense.

Now that is what you call an upgrade.

In fact all the analyst did is upgrade the price target to where APT was trading at the time...I am being serious.

This brought back lots of uncomfortable, and definitely not romantic, memories from late 1999.

You do remember when Wall Street equity analysts were falling over themselves to upgrade their price targets almost every week to keep pace with the frantic rise in technology stocks?

Putnam and many other huge money managers just kept buying and buying and buying as the money poured in and the equity analysts just kept upgrading and upgrading and upgrading their price targets.

BT, the Australian fund manager, launched their TIME (technology) fund in March 2000.

You remember that beauty???

Then just like a flock of birds in the sky that swiftly and suddenly change direction, it all collapsed.

then goes on to say
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I am sure APT is a mighty fine company that will make money one day.

According to the earnings estimates it should arrive at that happy day in 2022.

And if the earnings estimates [on graph] are accurate, then it is trading on a FY 2022 P/E of only 283 times.
Jonathan Pain



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Feb 10 2020, 05:59 PM
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QUOTE
Shares in buy now, pay later consumer credit provider Afterpay are up more than 1200 per cent since June 2017. But its meteoric rise is certain to continue to split the investment community.

On the way up, the fintech has ridden roughshod over regulators, posted a ballooning $42 million loss and raised about $660 million in new capital from retail, institutional, and private US technology investors. The two founders sold down about $100 million worth of shares in the 2019 financial 2019 after dumping about $35 million in shares between them in 2018.

Nice work if you can get it, but the investor enthusiasm for the business is not for nothing. Afterpay has been wildly successful in Australia, the US and UK in disrupting traditional credit providers with its interest-free credit offering.

The stats are impressive. At October 31, 2019, it had 6.6 million active customers worldwide across 32,500 retailers offering the service. It added an average of 22,000 new customers a day last November, compared to 12,500 a day in July 2019. Its US business signed up more than 3 million shoppers in its first 19 months and is already similarly sized to its Australian business. In the UK, its Clearpay business has signed up 500,000 shoppers in just seven months.

Moreover, it boasts signs of powerful compound growth potential as the longer shoppers use it, the more they spend.

Australian and NZ shoppers signed up between the 2015 and 2017 financial years now buy on average 22 times more a year. Those signing up in the 2018 and 2019 financial years now spend 14 times and seven times more on average.

But, converting that to earnings? If growth is profitless, what's the point?

QUOTE
Critics argue the business model's big weakness is that the 3.8 per cent fee it charges merchants will have to come down as the number of competitors offering cheaper fees grows.

In other words, Afterpay's business model has a narrow moat, because there's no complex technology, intellectual property or monopolistic market position to stop retailers or shoppers using alternatives.

The competitor roll call is growing all the time, with Zip Pay, Humm, Sezzle, Splitit, Openpay, Brighte and CreditLine all offering similar services – often at the same online checkout points of retailers.

Perhaps a more serious competitive threat is the launch last month of Europe's largest payments and buy now, pay later player, Klarna, in Afterpay's home market of Australia.




--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Dec 9 2019, 11:01 AM
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Jay-Z, Larry Summers on Afterpay register
Joe Aston
QUOTE
In total, there are 15.3 million options still to be converted into ordinary Afterpay shares. But there are another 21.8 million convertible from the US employee share option plan into the parent company. The recipients of these haven’t been disclosed and cannot be requisitioned. We only know that “no [key management personnel] participated”, ruling out Eisen, Hancock and Nick Molnar.

Who could possibly own all of those American options? Kanye? The Kardashians? “World-class talent in the US who are critical to delivering the group’s US growth aspirations.” New merchants then? And if Afterpay is handing out free or cheap stock to lure big retailers onto the platform (and diluting existing shareholders in perpetuity), what then are the real unit costs of onboarding? And what’s the real profit/loss profile of the business once its suppliers are paid in cash instead of paper?

These are all, yet again, the crafty tech bro practices of a start-up, not of an established ASX 100 corporation. Boy can that Eisen dance.

read more - https://www.afr.com/rear-window/jay-z-larry...20191208-p53hzq
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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 

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blacksheep
post Posted: Nov 29 2019, 07:02 PM
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Afterpay users could face surcharge
QUOTE
The $6 billion of buy now, pay later transactions made via Afterpay, Zip Pay and Flexi Group may soon have surcharge fees added on, because of regulator concerns other customers are subsidising users through higher prices.


QUOTE
"Afterpay is most exposed to this risk, in our view, given its economics relies on merchant fees. For Z1P, our preferred pick, this is incrementally negative."

read more - https://www.afr.com/companies/financial-ser...20191129-p53ffw
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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Nov 18 2019, 01:35 PM
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Afterpay's PR guy gifted 800,000 reasons to defend it

QUOTE
While Clegg’s spin shop Cato & Clegg is a consultant to Afterpay, and charges fees accordingly, Clegg received options reserved for “employees of the Group under the Company’s Employee Incentive Plan.” In all our days in journalism, and before it corporate affairs, we’ve never seen nor heard of anything like it.

The outstanding questions are manifold. Why would Afterpay's board issue employee share options to a non-employee? Why would it issue share options to a consultant whose firm it's already paying in cash for services? Indeed, why weren't the options issued to Cato & Clegg rather than Clegg personally? And all in exchange for what?!

https://www.afr.com/rear-window/afterpay-s-...20191117-p53bdb
https://www.shortman.com.au/stock?q=apt
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--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Oct 16 2019, 09:35 PM
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In Reply To: blacksheep's post @ Oct 16 2019, 07:09 PM

Investors wise up to the tech pretenders
Elizabeth Knight
QUOTE
Is the love affair between investors and technology companies over?

The failure of consumer credit provider Latitude to reach listing altitude, the very large valuation question marks now placed on Afterpay by a prominent investment bank and the latest debt financing dilemma faced by WeWork raises this question.

These companies have two things in common - they are masquerading as technology companies and they all carry risk

Investors are wising up to what counts as a true innovation stock with real prospects..


read more - https://www.smh.com.au/business/companies/i...016-p531ak.html



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Oct 16 2019, 07:09 PM
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In Reply To: blacksheep's post @ Oct 16 2019, 11:39 AM

QUOTE
Anthony Eisen responds to UBS Afterpay report
Afterpay chief executive Anthony Eisen disagrees the company faces significant risks of future regulation, arguing consumers know exactly what they're doing when they sign up to the service.

"I think they’ve made a choice around trust, simplicity...We never change the rules, we treat people fairly, we treat them consistently. I don't think we're changing people's [purchasing] desires," Mr Eisen told an audience at the Intersekt fintech festival in Melbourne on Wednesday.

Mr Eisen refused to be drawn on the analysis, saying he did not know the UBS research team and told the Sydney Morning Herald and The Age, "we leave it to the market to determine where we're at".

The UBS Evidence Lab note surveyed more than 1,000 customers of buy now, pay later services and suggested there were significant gaps in knowledge among consumers. It found customers who used those services were significantly more likely to have debts than those who didn't, while significant segment of customers do use these services as credit — UBS found 26 per cent of those surveyed used services like Afterpay because they couldn't afford an item otherwise. Eleven per cent had already reached their credit limits.

Full story available soon.

https://www.smh.com.au/business/markets/ing...016-p5313w.html




--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
 


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