Afterpay Ltd (ASX: APT) is an Australian financial technology company operating in the United States, United Kingdom, New Zealand and Australia. Afterpay has a market capitalisation of A$11.2 billion.
How has Afterpay performed recently?
Afterpay’s share price in March dropped to around A$10.00. In the last 2 months, Afterpay’s share price has increased to around A$44.40, this represents the highest share price Afterpay has achieved.
Year to date (14 April 2020) underlying sales is $7.3 billion, growing 105% compared to the prior correspond period. This HY20 growth rate is in line compared to HY19. March 2020 was Afterpay’s third largest underlying sales month on record, behind the seasonally higher months of November and December 2020, while Q3FY20 underlying sales increased 97% on Q3 FY19. Gross Losses for the month of March is estimated to be approximately 1.0% (unaudited), in line with HY20, notwithstanding increased contribution from newer markets that are initially higher loss early in lifecycle.
What has Afterpay announced today?
Afterpay announced today (21 May 2020) that there are now more than five million active shoppers in the US using the service at Afterpay merchant partners. Afterpay now has nearly nine million U.S. consumers who have joined the platform, including more than one million new customers using the platform during the COVID-19 period of the last ten weeks. This represents a 30-40% increase in the weekly run rate from January and February. These milestones have been achieved after launching in the U.S. just two years ago.
In addition to this increase in activity, more than 15,000 brands and retailers are offering, or in the process of offering, Afterpay to their customers.
What is the outlook?
Afterpay is continuing to grow the company’s global and domestic presence. Afterpay reported in Q3 FY2020 several new merchants that went live with Afterpay in the quarter or have signed with Afterpay. These new merchants are as follows: in Australia (eBay, Samsung, Lancome, YSL Beauty, Kiehius, Kookai, Georgio Armani Beauty, Horseland Online, Pet Food Australia, Salt & Pepper); in New Zealand (Sunglass Hut, Mitre 10, Hush Puppies, Number One Shoes, Hannah’s, Footlocker, Aje, Estee Lauder, RY, In the US, SHEIN, American Eagle, Romwe, The Hut Group, Perricone MD, Furla, Soko Glam); and in the United Kingdom (Kookai, Oh Polly, Elemis, Charles & Keith, RM Williams, Size, Tessuti, Foot Patro).
Afterpay is also planning to expand into Canada, with entry into this market is expected to be this calendar year. In addition, Afterpay‘s goal is to exceed the company’s underlying sales mid-term target of approximately $20 billion by FY22.
Afterpay has a sound balance sheet with total cash of $541 million and debt of $355 million as of 31 March 2020. At this point, Afterpay notes that there is no need to acquire additional capital for the foreseeable future.
What is the market reaction?
The market reaction to Afterpay announcement today is positive. Afterpay share price is up around 4% and is currently trading at A$44.48. This is a positive result given the Australian market is only up around 0.3%.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.