Search ASX code:
Generic filters

Why Afterpay Ltd (ASX:APT) shares have continued to lift off

The Afterpay Ltd (ASX: APT) share price was trading 9% higher today as more enthusiasm returns to the local market.

For context, the broader Australian share market or S&P/ASX 200 (ASX: XJO) was trading up 1.91%.

Afterpay Ltd

Afterpay Touch is the owner of the popular “buy now, pay later” app. As of 2020, Afterpay had over 7.5 million registered users worldwide, making it one of Australia’s true technology success stories.

The following video from Rask Australia explains how to value stocks using SaaS metrics.

Afterpay’s COVID-19 investor update

Earlier this week Afterpay gave a reassuring update to its investors who were growing increasingly concerned about the potential for rising bad debts and a dramatic slow-down in consumer spending. This has come at a time when Australians have begun to think more optimistically about a return to a ‘normal’ lifestyle.

Source: Afterpay update 2020

On Wednesday Afterpay said it was still too early to estimate the impacts of COVID-19 on the economy but it was acting quickly to respond to any challenges.

What was particularly promising for the company was the underlying sales result, which tells you how much money is being made by retailers using Afterpay. Afterpay said underlying sales for the year to date were $7.3 billion, up 105% on the same period a year earlier. Afterpay makes its revenue by taking a cut of the sales and managing the credit risk of any short-term customer defaults.

With regards to credit losses as a percent of underlying sales, the company said it was estimated to be around 1%, although these numbers were unaudited. This was in-line with the first half of its 2020 financial year.

With increasing sales, and losses at around 1%, the company said its net transaction margin, which is what Afterpay makes, was around 2%.

Finally, in terms of liquidity and downside risks, Afterpay said it has undertaken modelling which suggested it was capable of supporting operations for years based on its current cash flow and balance sheet. Meaning, if the economy does not return to normal anytime soon and continues ‘as is’, it’s capable of remaining afloat for at least another year.

What Happens Next?

Afterpay Ltd shares were last seen trading at $30, giving the company a market capitalisation more than $8 billion. That’s not exactly dirt cheap. If you’re considering taking a position in Afterpay there are three articles on Rask Media worth reading:

If you’re looking for our analyst’s top three cloud stocks for 2020 and beyond, grab a free report below.

Disclosure: The author of this article does not have a financial interest in any of the companies mentioned.

Afterpay, Zip Co, Sezzle…

Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW or entering your email below.

Note: the report is 100% free.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Afterpay, Zip Co, Sezzle…

Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW.

Note: the report is 100% free.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

Rask Media’s Ultimate BNPL Sector Report

Afterpay, Zip, Sezzle… is this the opportunity of a lifetime? Or is BNPL a ticking time bomb? This 7,500-word analyst report takes a deep dive into the BNPL sector and shines a spotlight on each of the major players in this booming market. 

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

As we emerge from COVID-19, some tech companies are growing faster than ever. Rask’s investment analysts have identified 3 growth stocks set to benefit. Big time.

Enter your email below to access this report for free, including the names, ticker codes and analysis.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.