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Underestimating regulatory change risks, page-46

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Andredamus1

2,137 Posts.

523

23/07/20

07:20

Post #: 46035787
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Originally posted by hankreardon: ↑

I think you are significantly underestimating the profitability of the Australian operations. I think it’s going to be more like $130m. Will be interesting for sure.

I encourage all posters who care about fundamental analysis to carefully look at the relative profitability of Afterpay compared to all competitors in the BNPL space. In my opinion, there is absolutely no comparison. I believe that adverse selection is going to increasingly play a role, and unlike other duopoly structures such as DiDi/Uber, bad debts are an absolute ticking timebomb. So if one business is acquiring all the profitable customers, it should tend to a global monopoly. The most amazing thing is that the disciplined customer acquisition is married with the most explosive growth. truly the gift that keeps on giving. I think we will look back in a decade and it will be spoken of in the same breaths as some of the US titans- it certainly compares very favourably on revenue milestones to just about every name other than Google or Facebook...but Afterpay started with a domestic market of 25m compared to 250m odd for the other names. To put in context- they have already acquired 10m revenue generating customers...in just 5 short years, how many other companies on the bourse have this many customers. How many Australian companies went from 0 revenue to 550m in 5yrs and almost certain to hit 1B within 6? Just a phenomenal company that I was lucky to hold on to...

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I'd be surprised if it were that high, as ANZ revenue will only be ~10% higher in the 2nd half compared with the first. Also the company has guided to Group EBITDA of $20-25m, so your ANZ number would imply an even higher loss in the US and UK (I am expecting the US loss to be ~$60m and ~$25m for ROW).

APT Price at posting: $72.50 Sentiment: Hold Disclosure: Held
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