Investors' timid reply to Afterpay results
Afterpay has failed to sustain the share price spike some pundits tipped would follow its full-year results, as questions remain as to the true value of the company.
The buy now pay later group reported a full-year net loss of $19.8 million on Thursday, although this was an improvement on the previous year's loss of $42.9 million.
Management preferred to talk about a 103 per cent lift in income to $502.7 million, and customer numbers. The latter more than doubled to 9.9 million across Australia, New Zealand, the US and UK.
About 17,300 new customers were added each day in the second half of 2019/20, as the coronavirus pandemic took hold and more people shopped online from home.
The average customer order was $153.
There were 55,400 merchants using the service, up 72 per cent from the previous year.
Investors had a radical reaction to the figures. They sent the share price to a record high of $95.97 soon after trading began. Yet momentum eased and the shares finished higher by 0.6 per cent to $91.26.
Investsmart market strategist Evan Lucas had concerns about the financials.
"The momentum is incredible and the user growth is incredible," he said.
"But the share price and underlying operations aren't matching up. The word `expensive' doesn't get close to what Afterpay is."
BC Capital Markets analyst Tim Piper believed the financial results were not a surprise as management had revealed most key data earlier.
He was interested in the way forward.
Mr Piper noted Afterpay started trading in Canada this month and would soon start testing Europe and Asia.
The company has also started rolling out a cross-border platform to help customers buy from overseas.
Mr Piper said Afterpay's recent capital raising from investors ($786 million) would help this growth over the medium term.
RBC has a price target of $77.0 for Afterpay, meaning analysts believe it is over-valued.
The company is yet to pay a dividend.
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