This post makes it pretty clear to me that you don't understand the business model of APT at all. Breaking it down:
Do you believe that a company that earns 25% of its revenue from late fees is a good look in society?
--> what does this even mean? Does it make a difference if it's from late fees or any other financing product? What is a good look in society? Is WOW making money off pokies a good look? Are the banks making money off lending a good look?
Do you believe that a company that lent out $918 million should only clip $37 million or 4.1% of that bearing in mind that this money is lent out unsecured
--> yes, the model is profitable. The whole concept of large volumes short-term loans for low amounts is actually lower risk than smaller numbers of big loans. I've modelled the economics previously...but here is a snapshot (from modelling done >6 months ago). As the business matures and the new customer % comes down the net transaction losses should drop significantly. If you model the customer acquisition costs as first customer defaults + % of sales & marketing, you work out very low customer acquisition costs.....Of note Afterpay has access to INTERNAL data to model these processes much more accurately than us with published financials...it is actually a very very very simple model. Also very easy to tweak if anything starts going the wrong way. Actually a much lower risk than you would expect.
|
Column 1 |
Column 2 |
1 |
New customer default rate |
10% |
2 |
1st order limit |
500 |
3 |
Annual gross spend recurring customer |
1750 |
4 |
Transaction margin |
4% |
5 |
Cost of financing/equity |
7% |
6 |
Recurring customer default rate |
1% |
7 |
Book turn rate |
30 |
8 |
% recoverable bad debts |
50% |
9 |
number of customers |
1649000 |
10 |
% new customers |
30% |
11 |
Calculations |
|
12 |
loans/year |
12.17 |
13 |
$ loans |
2267375000 |
14 |
margin |
90695000 |
15 |
loans paid |
2222464485 |
16 |
NETT |
45784485 |
17 |
Cost of finance |
13045171 |
Do you believe that the current merchant fee and model which led to a $743,000 half year loss needs no improvement?
--> maybe you need to check your figures....underlying results were profitable. Given D&A is non-cash expense, EBTDA is probably best metric and that is already quite reasonable.