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clock Created with Sketch. 26/11/17
11:10
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Originally posted by techinvestor17
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I'm not sure why you guys care so much about the loss for the 2017 year, if you take away the one round contract and the one off payments for the year Afterpay would have actually reported a profit. Now I've also heard some comment on here that afterpay is a Ponzi scheme, while I don't think it's a Ponzi scheme as such there is cause for thought about the entire model. Afterpay pays out the retailer and collect the cash in trailing payments from the customer which creates a timing issue for afterpay which they fill with debt. However the problem is when afterpay sales are rapidly expanding meaning money is being paid out up front but only being collected over the trading period means afterpay will in all Lilly hood continue to be cash flow negative until it reaches critical mass we're outgoing payments equal or are less then incoming, this may occur in a single geographic like Australia. This in my opinion is one of the main reasons for the touch merger as they are cash flow positive which means that amount can be funnelled into afterpay and reduce the amount they draw down on the loans. This is the main isssue for afterpay to deal with. Worrying about the credit risk and bad debts when they are proportionally reducing against after fees is trivial.
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They have a warehousing funding facility with NAB, recently increased to 350m. With their short pay cycle of 2 months 350m could easily support annualised sales of 2.5-3.0 billion generating a revenue of 100m.
