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AFY

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$2.74 afterpay holdings limited

haha this! This is exactly what I have said. I think the bad...

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Mexicanandre

112 Posts.

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13/06/17

08:42

Post #: 25236594
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Originally posted by swap ↑

The Adelaide Advertiser (News Corp) and Channel 9 are running negative pieces on this stock. They quote Fox Symes (who themselves are equally grubby) as saying that, "an alarming number of customers were presenting with [Afterpay] debts they cannot pay." and that 5% of all Fox Symes customers in April and May had an AFY debt.

The media are blaming a "spontaneous" account application process and lack of credit checks as being the main driver of the problems.

Shareholders should be asking why AFY isn't paying a couple of dollars per new account to do a Veda (Experian) or D&B credit check before approving a customer. By definition, not doing a credit check means AFY is lending to sub-prime and uncreditworthy customers.

This usually ends badly for all concerned, especially if the company (rather than the debt funder) has to take first loss.

Additionally, I suspect the company is understating its true loss rates. The issue here is that portfolio loss rates are calculated as write-offs divided by turnover. BUT... losses take time to flow through a credit portfolio, usually 6 months. So, the write-offs today are from customers that used their AFY account 6 months ago, when turnover was significantly lower. The explosive growth of the AFY lending book is potentially masking a huge delinquency and write-off problem.

If (or rather when) the company realises it has a problem, it will start turning the screws on customers who are in arrears - adding late payment fees and escalating collection activities - hence the increase in customers running to Fox Symes for help. This is usually a futile exercise - if a customer can't pay, they can't pay no matter how many fees you load on to them.

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haha this!

This is exactly what I have said. I think the bad debts are going to be much higher than reported, and growth will be hiding the real bad debt numbers.

Working in the higher risk payday space, Afterpay is EVERYWHERE on our customers. Im seeing almost 1/5 have afterpay, and I can see their repayments are not always on time!

They are targeting a high risk portion of the population. Wait until you can buy electronics with this, and I bet the losses will be even higher!

AFY Price at posting: $2.95 Sentiment: Sell Disclosure: Not Held
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