Afterpay Touch Shares Rocket 4% After Fund Manager’s Comments

The Afterpay Touch Group Ltd [ASX:APT] share price has shot up for the third day in a row and is currently up by 4.04% at time of writing.

The trend began on Wednesday after the company’s quarterly business update revealed 2018 underlying sales growth of 289% over the prior year.

The market’s frenzy has only heightened after fund manager Emanuel Datt from Datt Capital predicted Afterpay’s price will be worth a lot more in a years’ time.

What is he basing his predictions on?

While some financial commentary in the past has suggested that Afterpay’s share price is overvalued, one fund manager is choosing to disagree.

In a recent article for Livewire, he pointed out the unbelievable growth the company is now experiencing and suggests that it’s not likely to end anytime soon.

Afterpay has managed to dominate a large section of the online goods market in Australia, but is yet to conquer in-store purchase. It only has 0.5% in this area. This is where Mr Datt believes future opportunity lies.

As I’ve said in recent times, Afterpay has an attractive product. It holds mass appeal over a broad range of demographics, and encourages something that ultimately benefits the economy as a whole: more activity.

Mr Datt has also referred to the steady growth of the US online retail market, of which the size is now sitting at US$200 billion. And we haven’t even fully discussed the UK and EU markets yet.

The opportunity for Afterpay is exponential.

Time to invest?

If Mr Datt’s numerical predictions are correct, Afterpay will be making annualised gross sales of at least $5.5 billion in a year. One could guess that could yield a share price of around $25 to $50.

Mr Datt is only one person, so I’d be listening out to other commentary over the coming weeks. He at least suggested Amazon is the main competitor Afterpay needs to worry about, due to its large growth potential, gross sales and slim margins.

Yesterday, I also spoke about Paypal, Eftpos and other online payment solutions. If those companies up their game, then who is to say that Afterpay will still dominate?

But word on the street is that millennials are already coining ‘Afterpay’ as a verb, as in ‘I’ll just Afterpay it.’ What other company’s name do we use in our everyday language? That’s right — Google.

This in mind, it’s looking likely that Afterpay has a prosperous future ahead. How quickly this will happen is anyone’s guess.


Ryan Dinse,
Editor, Money Morning

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Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:

Money Morning Australia