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Afterpay overtakes Coles on the ASX200

Jessica Amir

August 27, 2020

Afterpay (ASX:APT) overtook Coles on the ASX200, becoming the 16th biggest company on the ASX. Today Afterpay reported its full year results, here’s what you need to know.

Afterpay reported a better than expected financial year update with an EBITDA of $44.4 million, beating the company’s expectation of $43 million.

Broadly APT’s results confirmed it is the leader in the Buy Now Pay Later (BNPL) sector in Australia and how it’s continuing to establish itself in the U.S., UK and Europe.

Active customers more than doubled in the year, now at 9.9 million, thanks to quicker success in the U.S. and UK, with customers there reaching 5.6 million and 1 million respectively.

Across the globe, 21,000 new customers per day used APT from April to June in the thick of the pandemic despite lockdown. That helped APT’s global sales grow 112% to $11.1 billion which puts APT on pace to generate over $15 billion p.a. in sales (based on its fourth quarter trading).

The market is awaiting more detail and clarity on its expansion into new markets particularly in Asia. APT is a buy for Bell Potter, Morgan Stanley and Ord Minnett. Morgan Stanley sees there being a 20% chance APT could hit $242.80 if uptake in Canada takes off as rapidly as it did in Australia, if Afterpay lands into the Asian region and if its partnership with Tencent comes to fruition.

Afterpay (ASX:APT) became the 16th biggest company on the ASX today overtaking Coles (ASX:COL).

Here’s what you need to know about their financial year results.

Well their report card was indeed better than expected.

Earnings (EBITDA) came in at $44.4 million in the full year, stronger than the $43 million expected.

Broadly their results confirmed that they are the leader of the by now pay later (BNPL) sector here in Australia and that they’re continuing to expand and cement themselves in the U.S., UK and in Europe.

So why were the results so strong?

Well active customers more than doubled in the year rising to 9.9 million exceeding Afterpay’s target thanks to success in the U.S. and the UK stronger than expected with their customers reaching 5.6 million and 1 million respectively in the U.S. and the UK.

Across the globe, 21,000 new customers per day use Afterpay from April to June, right in the thick of the pandemic despite lockdowns.

Now this helped Afterpay’s global sales swell 112% rising to $11.1 billion and that puts Afterpay on pace to generate about $15 billion per year in sales and that’s based on fourth quarter trading.

Afterpay’s loss decreased as expected which is good news.

Their total cash increased almost 500% to $1.4 billion. But what was a little bit disappointing was we didn’t see any plans unraveled for Asia or China growth or any details about their partnership with Tencent.

Despite that, all in all a very positive result, which is why its shares surged to a new all-time high on the day that their results came out rising to 95% $97.

So is Afterpay a buy now?

Well the market is indeed waiting for further clarity about expansion into new markets, particularly in Asia.

Afterpay is currently a buy for Bell Potter, Morgan Stanley and Ord Minnett.

It is a UBS sell though.

Morgan Stanley sees that there being a 20% chance that APT could rise to $242.80 if uptake in Canada takes off as rapidly as it did in Australia and if U.S. in-store adoption continues and of course if APT lands into the Asian region and cements its partnership with Tencent.

On the other side, if its expansion into Canada dies and if for whatever reason online shopping is completely scrapped, Morgan Stanley says that there’s a 20% chance that their shares could fall from where they are now.

Grady Wulff

August 12, 2024