The Afterpay Touch Group Ltd (ASX: APT) share price has shown no sign of slowing down in recent weeks, with APT trading up 2.8% on Thursday.

About Afterpay

Afterpay Touch is the owner of what is probably the most popular “Buy Now, Pay Later” app. As of 2019, Afterpay had over 3.5 million registered users worldwide, making it one of Australia’s true technology success stories. 

In terms of users, Afterpay appears to be well ahead of ASX rivals Sezzle, Splitit Payments Ltd (ASX: SPT) and Zip Co Ltd (ASX: Z1P), each of which are competing for the presence of mind and a greater share of consumers’ wallets.

Rask Media’s William Donnan recently provided the most comprehensive summary of each of the Buy Now, Pay Later apps in Australia in this article, “Afterpay V Splitit V Zip Co V The Rest — Everything You Need To Know”.

Is Afterpay Out Of The Regulation Woods?

Over the past 12 months, Afterpay has faced mounting criticism from consumer advocacy groups and regulators alike. Fortunately for Afterpay shareholders, in February 2019 the Senate Standing Committee on Economics chose not to include Buy Now, Pay Later apps in the National Credit Code.

With no regulation relief (for consumers) and minimal oversight (from regulators), Afterpay is able to market its short term ‘financing’ of purchases without being considered a “credit” product. Credit products, such as credit cards and payday loans, come with a variety of compliance burdens and consumer protection mechanisms which ultimately make them less profitable and more risky for the credit providers (e.g. banks).

Are Afterpay Shares Still Cheap?

Afterpay shares have been on a blistering run since 2017.

The possibility that Afterpay’s US venture could prove to be extremely valuable has enabled some investors to justify its current market capitalisation of nearly $6 billion. To learn more about valuing Afterpay shares, read this article: “How I’d Value Afterpay Shares”.

However, the range of outcomes — good and bad need to be considered carefully. There are no guarantees in investing, and competition is growing. Therefore, Afterpay shares might only be suitable as a small position for investors with an extremely high-risk tolerance.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

Disclosure: Neither the author of this article nor The Rask Group (Rask Media’s owner) have a financial interest in any of the companies mentioned.