The Afterpay share price rose 7% today

The Afterpay Touch Group Ltd (ASX:APT) share price rose 7% today.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Afterpay Touch Group Ltd (ASX: APT) share price rose 7% today, making it one of the top performers in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

One of the main reasons for Afterpay's resurgence today came from the gains in overseas markets. The US S&P 500 Index rose over 3% on Friday and various FAANG shares went up even more including Apple which went up 4.3%, Facebook rose by 4.7%, the Microsoft share price climbed 4.7% and Alphabet shares went up 5.1%.

Our local tech shares generally follow the movements of the FAANG shares on any particular good or bad day.

Rival Zip Co Ltd (ASX: Z1P) also featured in an AFR article today saying that it supports industry-wide responsible lending checks and caps on late fees.

Afterpay has defended its consumer checks, saying "This is a sophisticated algorithm-based technology which identifies likely risk spots both within customer groups and by particular products. As a result, up to 30 per cent of order requests are not approved – this can be as high as up to 50 per cent for first-time customers.

"The accuracy of these checks has ensured a default rate on purchases that is currently less than 1.5 per cent. This has reduced over time, notwithstanding Afterpay's rapid growth rate, and is about half the default rate of others in the [buy now, pay later] sector who do conduct what they refer to as credit checks."

Foolish takeaway

Afterpay has made excellent progress with its business growth and revenue. FY18 delivered triple digit revenue growth and positive earnings before interest, tax, depreciation and amortisation (EBITDA) before significant items.

However, it's now trading at 96x FY20's estimated earnings, which is too expensive for me to consider buying at.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A businessman stacks building blocks.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares hit a new record high today.

Read more »

A man sees some good news on his phone and gives a little cheer.
Share Gainers

Why Auckland Airport, Australian Ethical, Breville, and Clarity shares are charging higher

These shares are having a better day than most on Thursday. But why?

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Share Fallers

Why 29Metals, CAR Group, DroneShield, and Santana Minerals shares are falling today

These shares are missing out on the good times on Thursday. But why?

Read more »

Cheerful businessman with a mining hat on the table sitting back with his arms behind his head while looking at his laptop's screen.
Broker Notes

Macquarie tips 50% upside for this ASX 200 miner, and it's not BHP!

Unheralded miner poised to surge?

Read more »

A woman sits at a table with notebook on lap and pen in hand as she gazes off to the side with the pen resting on the side of her face as though she is thinking and contemplating while a glass of orange juice and a pair of red sunglasses rests on the table beside her.
Share Market News

Will these ASX 100 shares surge or sink in July?

These are two ASX favourites to watch closely this month. 

Read more »

a man in a business suite throws his arms open wide above his head and raises his face with his mouth open in celebration in front of a background of an illuminated board tracking stock market movements.
Share Market News

3 ASX ETFs for smart investors

Let's see what makes these funds top picks for Aussie investors.

Read more »

A woman sits on sofa pondering a question.
Broker Notes

Guess which ASX All Ords media stock Macquarie expects to rise 17% over the next 12 months?

The broker is expecting big things from this media company.

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Share Market News

5 things to watch on the ASX 200 on Thursday

It looks set to be a good session for Aussie investors on Thursday.

Read more »