Afterpay’s Share Price Dives More Than 11% Today

After gaining 19% on Monday, Afterpay Touch Group Ltd [ASX:APT] has slumped by 11.66% after announcing its next phase of growth in the US.

At time of writing, Afterpay’s share price sits at $18.11 per share.

But a drop in share price after a big announcement such as a company’s growth expenditure, naturally makes a stock more sensitive to shifts.

Ideally shareholders want a stock with the best chance of rising gradually over time…

That’s why Money Morning contributor, Sam Volkering shares four Aussie stocks he thinks could be performing well this year and beyond. You can read more about his stock picks here (for free).

Afterpay’s share price hit by US expansion plans

In its latest announcement, APT said it should have over one million customers and 2,000 merchants using the service in the United States by the end of March — a feat that ‘remains above expectations’.

Despite analysts expecting a small profit in the six months to 31 December, APT recorded $22 million net loss, with employment expenses increasing on account of new hires, such as the Silicon Valley technological industry.

At near-term Afterpay is focusing on:

Accelerating US and international growth, investing in key brand relationships, platform innovation and broadening global support and infrastructure. 

This accelerated growth strategy will lay the foundations for mid-term value creation.’

Meanwhile, Australian Afterpay operations are continuing to spreads into other retail ventures like healthcare and travel experiences.

Afterpay processes over 10% of all Australia’s e-commerce transactions, as well as climbing in-store sales.

As reported by the Australian Financial Review, monetary value of things purchased using Afterpay in-store and online, across Australia, New Zealand and the US has risen from $0.9 billion in 1H18, to $2.3 billion.

Afterpay’s 2019 outlook

Despite exponential growth potential, Afterpay made an overall loss.

Sceptics are suggesting that Afterpay’s share price and overall performance will be damaged as economic conditions decline, and customers using the service either miss instalments or fail to repay them.

Income from merchants is up 140% to $88.9 million, with late fees increasing 17.6% to $18.2 million — although that figure is still down from its previous 22.5%, most likely on account of scrutiny pressing on how vulnerable customers were being treated.

But there is this to say, Afterpay’s share price has been steadily climbing over the last year and is a company that is on task to continue this growth.


Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

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