The Afterpay Touch Group Ltd (ASX: APT) share price is going nuts this morning, it’s currently up by more than 13%.
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.
Why The Afterpay Share Price Is Going Nuts
Afterpay released its response to the Senate inquiry into credit and financial services targeted at customers with supposed financial hardship.
Based on the report, Afterpay said that it does not expect any material impact on its business or business model from the recommendations made. Afterpay said it supports the recommendations because they are sensible, appropriate and a proportionate policy response.
Afterpay said that Senate inquiry process highlighted “important fundamental differences” between the buy now, pay later sector and traditional credit products and the need for a separate regulatory framework outside of the National Credit Code.
In-fact, Afterpay was pleased to say that it welcomed comments in the report that Afterpay has brought competition to the market and reduced the need to traditional credit for many customers.
The buy now, pay later business agree with policy-makers that providers need to find ways to collaborate using technology and share information about a small group of people that shouldn’t use the services because it isn’t suitable for them.
Afterpay reminded investors that it has now been scrutinised by ASIC, the Australian Senate and the New Zealand Government and all found that Afterpay requires separate regulatory framework compared to traditional credit.
Afterpay also said that its industry-leading default rate of less than 1.5% and low level of late fees (only 5% of payments) show that its systems are working to encourage responsible lending behaviour.
Is Afterpay a buy?
The market seems to think so, the share price briefly hit $20 this morning. Regulation was one of the major potential risks to Afterpay and now that appears to have passed, for now at least. At around $20 I couldn’t call it a buy, it looks very expensive. But I wouldn’t be surprised to see it continue to succeed in the US and the UK.
2 ASX growth shares that look much better value than Afterpay
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