In afternoon trade the Afterpay Holdings Ltd (ASX: AFY) share price has been one of the biggest movers on the market after it announced a two-year contract with retail giant Myer Holdings Ltd (ASX: MYR).
At the time of writing the shares of the explosive payments company are higher by 6% to $2.33.
The contract will see Afterpay's popular buy now, receive now, pay later service made available initially on its online store from the fourth quarter of FY 2017.
I think the word initially stands out in today's statement. Whilst the roll out onto Myer's online store could prove to be very lucrative for Afterpay, I believe having the service available on Myer's shop floor would be even better.
Myer is just the latest in a range of retailers adopting Afterpay's service. Other notable companies using its service include Telstra Corporation Ltd (ASX: TLS), Super Retail Group Ltd (ASX: SUL), Lorna Jane, and Cotton On.
But is it a buy?
Whilst I think Afterpay has an incredibly bright future ahead of it, I'm holding off an investment at this point in time due to its planned merger with Touchcorp Ltd (ASX: TCH).
As I've said previously, 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, I am concerned that it may ultimately act as a drag on Afterpay's explosive growth.
As Afterpay's shares come at a significant premium to the market average, any slowdown in growth could result in a big hair cut for its share price.
