The Afterpay Touch Group Ltd (ASX: APT) share price fell 5% today, which is a painful drop for anyone who bought shares yesterday.
However, anyone who bought shares just a week ago is sitting pretty, it's up 16% over the past week. The Afterpay share price is up 30% over the past month. What a rollercoaster it has been for shareholders over the past half year!
Except for today, the latest positivity surrounding Afterpay came from its recent business developments update.
On Friday, Afterpay announced that in the first half of FY19 underlying sales grew by 140% to over $2.2 billion. Afterpay's US business processed $260 million of underlying sales with annualised sales tracking in excess of $500 million.
Afterpay also said that over 23,000 merchants have transacted with Afterpay globally in the last 12 months and it has had over 3.1 million active customers in the last 12 months, growing at an average of approximately 7,500 new customers per day during the second quarter of FY19.
Afterpay was able to reduce its gross losses and also reduce late fees thanks to scale benefits and investing in risk management capabilities & processes. It was able to maintain its net transaction loss performance despite the scaling of its US business (which was expected to incur higher losses in the formative and scale-up period).
The growth of Afterpay has been impressive and it could keep gaining share in Australia as it expands into different industries such as optometry and theme parks.
However, it's the US and UK potential growth that investors are getting the most excited about.
Foolish takeaway
But, as many value investors point out, Afterpay is certainly trading with a lot of growth expectations. It's trading at 113x FY20's estimated earnings. Is this good value today? I'm not sure, if grows as much as expected then perhaps it is. But having a three-digit forward price/earnings ratio is hard to advocate for a buy, although it may turn out well over five or more years.
