The Afterpay Touch Group Ltd (ASX: APT) share price continued to fall on Wednesday despite attempts to reassure investors and the market. The fall comes after a fake user, Micky Mouse, allegedly used its services to buy alcohol.
Afterpay Touch Group is a $1 billion software company which created an application allowing shoppers to buy now and pay later using a smartphone.
According to its ASX announcement today, Afterpay Touch Group has conducted over 13 million transactions and has 1.5 million registered users.
What Credit Code?
Although Afterpay Touch Group’s technology allows customers to use their credit card to buy things and pay it back in instalments at later dates, it is not regulated under the National Credit Code.
But with more allegations of inappropriate use of buy-now-pay-later applications, ASIC recently announced a review into the sector.
“We welcome that review and continue to actively engage with the regulator,” Afterpay Touch Group said today.
In just one month, Afterpay Touch Group shares have fallen from over $7.90 to close today at $5.65, according to Yahoo! Finance.
Outrage: Mickey Mouse Fools Afterpay Robot
Following a report by governance firm, Ownership Matters, Fairfax Media reported today that Afterpay Touch Group has been forced to change its processes.
The report revealed that an underage person was able to inappropriately use the Afterpay service to buy $300 of alcohol by providing prepaid credit card details and information. According to the report, “Miguel Laucha” was the fake name which can be translated from Spanish to mean Mickey Mouse. Mickey Mouse paid for services in Melbourne but ‘lives’ in WA.
In an ASX statement today, Afterpay Touch Group said it is committed to responsible customer spending, making product enhancements (including External ID verification) and working with the regulator, ASIC.
“Afterpay is committed to responsible customer spending and is clearly resonating as an alternative to credit for discretionary purchases to customers who can and do use the service regularly,” the company said.
That’s Not All Folks
Afterpay Touch Group also said its two founding shareholders, Anthony Eisen and Nick Molnar, may sell up to 10% of their shareholdings in the next 12 months for “asset diversification reasons”. Their shares are currently in escrow, due to be released on May 8th, 2018.
Combined, Eisen and Molnar own 23% of Afterpay Touch Group. Meaning, a 10% sale will represent less than 2.5% of all shares in the company.
Afterpay Touch Group experienced rapid share price growth as its buy-now-pay-later service took off with online and in-store retail customers. The company said it will release its quarterly update next week, which should provide more financial details for investors.
According to the $1 billion company’s most recent half-year report, released publicly in February 2018, Afterpay made revenue of $49.9 million and a profit of $0.7 million.
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