After a month of heavy declines, the Afterpay Holdings Ltd (ASX: AFY) share price has climbed higher by 5% today following a positive announcement out of the exciting fintech company.
According to the release the payments company has entered into an agreement with global ecommerce platform provider BigCommerce.
BigCommerce operates one of the world's leading ecommerce platforms with over 100,000 active online merchants globally. Approximately 5,000 of these online merchants are based in Australia.
The agreement will allow BigCommerce affiliated online retailers to effortlessly introduce Afterpay's buy now, receive now, pay later service, potentially boosting the number of retailers using its service dramatically.
Prior to today's announcement the company had 3,100 retailers using its service. This is a remarkable 24% increase from mid-February and goes to show just how popular it is becoming with both consumers and retailers.
Is Afterpay a buy?
Whilst I am a huge fan of Afterpay and believe it is one of the most exciting fintech companies on the ASX, its shares are extremely expensive at 100x sales.
If the company's planned merger with Touchcorp Ltd (ASX: TCH) is a success then I believe it could create a force in the industry that justifies the premium.
But only time will tell if things work out as planned. My main concern is with Touchcorp. While the Afterpay business has been growing like wildfire in the last 12 months, the Touchcorp business has been a huge disappointment.
If Touchcorp isn't able to successfully leverage Afterpay's network, my fear is that it may ultimately act as a drag on Afterpay's explosive growth.
So for now I would suggest investors sit this one out and look at other exciting fintech options such as Class Ltd (ASX: CL1) and BPS Technology Ltd (ASX: BPS) instead.
