Sezzle may soon be listing on the ASX, which could hurt the Afterpay Touch Group Ltd (ASX: APT) share price.
Afterpay Touch is the owner of the popular “buy now, pay later” app. As of early 2019, Afterpay had over 4 million registered users worldwide, making it one of Australia’s true technology success stories.
Sezzle’s Upcoming Listing
Buy now, pay later Sezzle is considering a listing on the ASX according to reporting in the Australian Financial Review’s Street Talk.
Sezzle is looking to raise $42.9 million which values the business at $213.3 million in terms of market capitalisation. It’s supposedly priced at $1.20 per share, although that’s a bit arbitrary based on the amount of shares being issued.
Broker Ord Minnett is the one in charge of the initial public offering (IPO) and wants to have funds in place in 10 days from now.
Sezzle reportedly has almost 270,000 customers across 12 countries with more than 3,300 active merchants at the end of March 2019. In the March 2019 quarter its merchants’ underlying sales were US$28.3 million, which was a substantial increase from US$1.6 million compared to the March 2018 quarter.
How Could This Affect Afterpay?
Afterpay is doing well right now as it continues to grow its underlying sales at a strong rate, although the share price has been falling in recent weeks.
In the short term investors may decide to sell down Afterpay shares and buy into Sezzle, which could hurt the share price. With Sezzle being so much smaller than Afterpay it has much larger growth potential if it can grow at a fast pace.
In the longer term Sezzle could damage Afterpay’s share price by being a growing competitor. Except for brand power, I don’t think there is anything truly un-copy-able about Afterpay’s offering to merchants or customers. Therefore, more competitors could be a bad thing for Afterpay, particularly in the US. That’s why I would rather invest in the growth shares in the free report below instead.
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