Float Watch Report
Published 11-APR-2016 00:00 A.M.
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1 minute read
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Overview: Afterpay Holdings Limited ("Afterpay", "the Company") is an Australian microfinance company focused on payment solutions. Afterpay offers a service and software infrastructure that allows retail merchant clients to offer ‘buy now, pay later’ programs to end- customers. Afterpay generates revenue via merchant and transaction fees and as of the date of the prospectus had 100 retail clients and 38,000 registered end-customers. The company was founded in 2015.
Catalysts : Since its inception in 2015, Afterpay has witnessed interest for its services, and increased monthly revenue 10-fold while securing more than 100 retail merchant clients and 38k end-customers. In order to sustain the trend, Afterpay will use the proceeds to increase funding and working capital. Progression from product validation to scalable sales growth is expected to be the main share price driver.
Hurdles : Afterpay is reliant on external capital to fund its daily operations and with a limited operating history there is no guarantee that planned growth initiatives will yield a return on shareholder funds. Afterpay operates in a highly competitive environment and may be subject to increasing competition. A significant degree of the unallocated free float may impair early trade in its shares.
Investment View: Afterpay offers speculative exposure to the microfinance industry. Early growth momentum and existing client network are attractive qualities. However, the company was founded in mid-2015 and has a limited operating history, whilst being reliant on external capital. Demand for its product is an initial validation signal, however, IPO participants are required to have a high-risk appetite for this start-up.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
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