Afterpay’s Share Price Rises before Entering Trading Halt| ASX:APT

Today, Afterpay Touch Group [ASX:APTentered a trading halt, after announcing a capital raising.

Before the trading halt, Afterpay’s share price spiked on Thursday, trading to $25.17 before settling at $24.15 on Friday, 7 June.

The S&P/ASX 200 has opened with a rise of 102.40 points at time of writing.

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What caused Afterpay’s trading halt

Afterpay’s capital raising announcement comes with the news that APT founders, Anthony Eisen, Nicholas Molner and David Hancock, are selling millions of shares to two US investors — Tiger Management and Woodson Capital.

Mr Eisen and Mr Molner will sell 2.05 million of their shares (keeping a remaining 2.05 million) for a combined $49.5 million. While, Mr Hancock is selling 400,000 of his shares, valued at $9.6 million.

In the announcement, Afterpay is also undertaking a full underwritten institutional placement of about 14 million new shares to raise $300 million.

The new shares have a floor price of $21.75. A share purchase plan is also being offered to raise $30 million. This is a bid to foster growth in the US market, in offering the 10% discount to the last trading price.

In their announcement today, Afterpay said: ‘Our experience to date confirms the US Scale-up opportunity is clear, supporting an accelerated investment in the global opportunity.’

The company also released its investor presentation which saw significant growth across the board, with underlying sales at approximately 4.7 billion (unaudited) in 11 months to 31 May 2019. This is up 143% since the previous period.

Afterpay’s 2019 outlook

As Afterpay continues to expand its markets globally, it’s possible that we could see further improvements to its share price.

But as competition intensifies from other ‘buy now, pay later’ service providers, we could see Afterpay’s share price increases come to a bit of a fork in the road.

Of course this hasn’t happened yet, and it might not ever happen.

More to come.

Kind regards,

Ryan Clarkson-Ledward,

For Money Morning

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Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. 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’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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