Afterpay Touch Group Ltd (ASX: APT) is going to give retailers a Christmas hangover in 2019, according to analysts.
Afterpay Touch is the owner of the popular “buy now, pay later” app. As of 2018, Afterpay had over 2.5 million registered users world-wide, making it one of Australia’s true technology success stories.
The Afterpay retail hangover
According to UBS analyst Ben Gilbert, Afterpay and Zip Co Ltd (ASX: Z1P) made up at least 15% of sales growth for some of the ASX’s discretionary retailers like Wesfarmers Ltd (ASX: WES), Myer Holdings Ltd (ASX: MYR), Adairs Ltd (ASX: ADH) and Kogan.Com Ltd (ASX: KGN)
But, this sales boost will be hard to replicate again in 2019 unless there are lots of new customers looking to use short-term credit to fund purchases they wouldn’t have spent on.
Afterpay has estimated that around 23% of its customers wouldn’t have bought certain things if not for the service. It’s probably up to each investor to decide whether that’s unsustainable or it’s the instalment model that helps people budget for the expenditure.
Retailers will need to weigh up whether the cost of Afterpay is worth the sales boost in time.
With an inquiry looming over Afterpay, I’m not sure that now is the best time to buy its shares. But, if you’re looking for cheaper shares growing like Afterpay, you should check out the rapid growth shares in the below free report.
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