Alternative Metrics, page-136

@vboy
Nice to see your metrics. I would argue that the best reason to use multiple data points is to make sure the story fits with the management figures and it is certainly easy when all the ducks line up like this.

I would however argue that the metric you should be using is dependent on the question you are asking.

So if the question is:
1) What is a leading indicator of US sales growth?

What you really want to know is how many unique customers you are generating (because ultimately sales = no of customers * average annual spend).

The best indicator of this is organic interest and the best indicator of aggregate demand is google trends for this purpose (note once established google trends is not that good because people go directly to the app). For real-time information you need unsmoothed data that updates frequently and Alexa web rankings gives both an indicator of geographic contribution and interest. US total share is nearly 14% already (Aus is about 75% from 80 last week and NZ steady at 5). The US ranking has improved from
about 60,000 to 30,000 in 2 weeks- Sezzle is stuck at about 60,000!

The second point I would make is about bad debts. Be very careful about over-interpretation of bad debts information from limited data. You have to be very good at modelling this information if you don’t want to make a big mistake - new customers default at much higher rates than old customers so have to be discount bad debts for growth. There are a number of tests you can conduct based on audited balance sheet plus cashflows but even then you really cannot tell unless you know exactly how the costs are allocated in the accounts given lots of their growth expenditures.

If APT wasn’t 22% of my portfolio right now I would actually be buying more and I have thought about topping up closely in the last couple of weeks but have to meet my risk tolerances which are already way out of whack due to uneven portfolio growth and mostly inaction on my part. The rationale is that all indicators point to viral US growth. If US penetrates anywhere near as fast as Aus/NZ then we are talking about a 2-3 year runway and 1B in revenue in the next 12-18 months. Assuming 300m shares on issue (cap raise) those sorts of sales figures give a 2yr price target of $60+ or +500%. Even if you assume a risk of 50% drawdown you have a reward/risk ratio of >10.

I think there is >30% chance of the above happening on the basis of available data. I have not seen a company on the ASX hit revenue milestones at the speed of APT ever and it is in pretty esteemed company when you look at years to 100M revenue (4-5yrs) are similar times to the likes of Google and Amazon. Presumably once US market is looking good we have Canada and the UK next and then maybe a slow burn to the next suitable market.