Afterpay Valuation, page-1833

I went short APT via options today (after years of being long to $40) for a number of reasons. Not least of which was my partner (who is a reformed shopaholic and who knows every boutique sales assistant in Sydney I swear) informing me that the masses of 20/30 somethings shopping are spending money they've taken out of their superannuation funds, according to her 'friends'. Anecdotal of course, but so often a good focus on microeconomics gives insight into macroeconomics. When government hand-outs decline and job losses continue to bite, more and more people will placing budgeting over convenience. APT's price has gotten way ahead of the retail situation in Australia, UK and USA. APT was $40 pre-COVID. If you are telling me in less than 5 months APT's forward earnings have increased across that period, I don't buy it I am afraid...

Sorry guys, but APT price has gotten a bit silly now. APT is great for struggling low income earners living week to week on wages unable to otherwise afford luxuries, in near full employment societies, but the same things that drove APT recently will be its demise in the long-term. BNPL firms denying retailers to pass on fees and a flood of individual debt issues will refocus regulators and consumer groups back on BNPL's. When we are all effectively paying higher prices across the board to cover the margin effects of 3-7% charges on a growing aspect of gross retail sales, because of rather ignorantly embraced payment vehicles, retailers and regulators will force change. Even the most vehement APT lovers amongst you must see the moral hazard of us all paying prices essentially because a proportion of society can't budget.

The US consumer economy is on its knees and looking at California etc is about to get a lot worse. When Government hand-outs abate around the world, things are going to get tight again, and BNPL's could very quickly come in the cross-hairs of regulators, struggling retailers and consumer advocacy groups.