The Afterpay Touch Group Ltd (ASX: APT) share price jumped 6% to $5 this morning, as the company's latest quarterly report shows that growth continues to explode. Afterpay has:
- Added ~2,600 new merchants since 30 June 2017
- Currently has 1.1 million customers, up from 0.85 million at 30 June
- Repeat transactions per month are over 80%
- Began expanding in New Zealand
- 0.07% of customers paid late fees
- PAY NOW (formerly Touchcorp) is performing in line with expectations. Revenue expected to increase over the full year.
Afterpay continues to grow at an incredible rate, as consumers hanker after the company's buy-now, pay-later, fee-free service.
Already I've noticed anecdotally that Afterpay has become a point of differentiation for retailers, with consumers leaning towards those that have it.
I expect it is a matter of time before Afterpay expands into other categories such as electronics. I have not seen companies like Harvey Norman Holdings Limited (ASX: HVN) or JB Hi-Fi Limited (ASX: JBH) yet surely these are attractive markets for consumers.
With 1.1 million customers, Afterpay would appear to have a long runway ahead of it both in terms of Australian and NZ consumers. Risks remain around repayment, with the company noting that 0.07% of customers paid late fees.
Speaking for myself, I have always been a bit sceptical of Afterpay's model, feeling that I wouldn't be interested in owning a business that lends to people who can't afford $70 for a dress. I still have that scepticism although some developments like limits on the number of items (1) that can be 'Afterpaid' and lower price caps for new purchasers should see the risks relatively contained.
Afterpay has a big opportunity ahead of it and I think it could be an opportunity for an investor with a firm grasp of what the company is worth.
