Can Afterpay’s share price touch A$75 Mark? Lens on BNPL Players

  • Jun 17, 2020 AEST
  • Team Kalkine
Can Afterpay’s share price touch A$75 Mark? Lens on BNPL Players

Summary

  • Coronavirus pandemic has given a significant boost to the BNPL players with global economies increasingly looking towards digital technology.
  • Companies in the BNPL space have been experiencing strong business performances with increased merchants on board and customers globally.
  • With preference shifting towards contactless, digital transactions and services, the future of the BNPL industry looks promising as it promotes hassle-free online payments and may continue to witness surge post-COVID-19 era.
  • Afterpay has led the race aided by impressive Q3FY2020 results, a considerable increase in US customers and strategic partnerships with Tencent and eBay.

The coronavirus pandemic has acted as a boon for the Buy Now Pay Later (BNPL) companies that facilitate digital payments, thus allowing social distancing through contactless payments. Demand for digital payments, among other online transactional services, has seen a sudden spike in the last couple of months. At a time when people were urged to maintain physical distancing, contactless payments were bound to gain traction, thus benefiting the BNPL players.

ALSO READ: BNPL Stocks Benefitting from the Boost in Contactless Payments

The stock markets have also taken cognisance of the fact that demand for such services was on the rise. The share prices of companies, including APT, Z1P, OPY, and SPT have reached sky-high during this period, as they demonstrated impressive, COVID-19-proof performance.

Let us see how the stocks fared during the COVID-19 outbreak.

Afterpay Touch Group Ltd (ASX:APT)

Afterpay Touch Group Ltd had been the talk of the town since the start of 2020. The stock is currently trading 84.52% higher on a YTD basis and ended at A$56.290 on 16 June 2020, up 10.477%. The impressive rise in share price is primarily backed by increased revenues and a growing customer base. Let us understand the Company’s performance to see if APT’s share price can breach the A$75-level mark.

Since January 2020, the Company had reached various milestones. Afterpay started the year by closing its share purchase plan (SPP) by offering A$15,000 of new fully paid ordinary shares in Afterpay to eligible shareholders from Australia and New Zealand without any brokerage or fees. On the SPP closing date (17 January), the share price reached A$33.220, over 44% higher than the offer price.

On 27 February 2020, the Company released its 1H FY2020 results with a 109% growth in underlying sales hitting A$4.8 billion. The growth was driven by a surge in revenues from its Australia, New Zealand, and US businesses. With 7.3 million active customers, the Company also announced expansion plans along with strong funding position to give shape to its strategies. Global active merchants on the APT platform also surged by 86% during this period over the previous corresponding period.

On 14 April 2020, the Company announced a business update with A$7.3 billion YTD sales. APT also demonstrated a strong cash position with a requirement for additional funding. The share price surged by 29.09% to close at A$28.400 at the end of the day post announcement of the business update.

Late May, the Company came out with multiple announcements: a partnership with Tencent Holdings Limited with the latter gaining 5% stake in APT, reaching 5 million customers in the US, formal appointment of Elana Rubin as chair of the Group on 25 May, and last but not least addition to MSCI Australia Index on 29 May. 

With COVID-19 continuing to impact all the major economies, and APT well-positioned to expand without taking any additional funds, Afterpay might have a promising future which may see a considerable uptick in the share price

RELATED: The Ever-Evolving BNPL Space - ASX-Listed Stocks Taking Charge    

Zip Co Limited (ASX:Z1P)

Zip provides point-of-sale and digital payment services to merchants and consumers catering to the health, retail, education, and travel.

Z1P’s shares prices rose by more than 300% since its March low, backed by robust business performance. ZIP experienced record success in Q3 2020. The Company recorded A$45.0 million in Q3 2020 revenue, an increase of 96% compared to the previous year corresponding quarter.

Through its BNPL solutions, ZIP experienced strong business results in April and May. The Company recorded A$15.1 million in revenues in April, an increase of 81% compared to the previous year corresponding month. Zip also added ~70,000 customers in the same month taking total customer base to 2 million, with merchant numbers increased to 23,100.

May generated revenue of A$15.6 million, an increase of 78% compared to the previous year corresponding month. Transaction volume also increased by 63% to reach A$189.3 million.  The Company added about 65,000 new customers in May, taking total customers reached 2.1 million.

On 9 June, Z1P partnered with Neobank 86 400 for users to track their transaction and manage banking better. The announcement drove the share price by 15.78%.

The Company also acquired a New York-based BNPL provider QuadPay Inc. The acquisition will enable Z1P to enter the US market and add 1.5 million customers and 3,500 merchants on board.

Z1P closed the day’s trade at A$6.320 on 16 June 2020, up 9.532%.

Openpay Group Ltd (ASX:OPY)

Openpay Group Ltd provides BNPL payment solutions by offering flexible, interest-free payment plans at in-store, online and through the Openpay App. The Company covers Australia, New Zealand and the UK and caters to industries such as retail, healthcare, automotive, and more.

The Company’s shares last traded at A$2.750 on 16 June 2020, up 28.505%. The stock has moved up 72.58% on a YTD basis. The rise has been backed by a £25 million funding and robust Q3 FY20 results. OPY secured a debt facility from UK financier GGC (Global Growth Capital) with £10 million from the fund immediately available to augment its UK business. This new facility is in addition to the Company’s existing A$75 million debt facilities of which A$30 million has been drawn.

Openpay reported robust growth with the Company reporting a 220% increase in active plans to 739k, a 131% lift in active customers to reach 293k, and a 50% jump in active merchants to reach 2,096 on its platform in May 2020 over the same previous corresponding period.

On 4 June 2020, Openpay received binding commitments and inbound interest worth A$33.77 million from existing and new institutional investors to subscribe over 14 million shares, at an offer price of A$2.40 per share.

Splitit Payments Ltd (ASX:SPT)

Splitit Payments provides open banking payment platform facilitating credit card-based instalment solution to businesses and merchants. The share price of SPT has soared 92% since March 2020 to A$0.685 on 16 June 2020.

On 4 June 2020, Splitit shares jumped by more than 20% backed by strong business performance The BNPL hit US$25.8 million in monthly Merchant Sales Volume (MSV) in May, demonstrating a 321% increase over May 2019 and 39% compared to April 2020. In North America, MSV increased by 336%, and in Europe, MSV experienced a surge of 548% over May 2019 figure. In May, Total Unique Shoppers were up 18% from Q1 FY20 end, surpassing 290k. Total Merchants reached 964, up by 12% from Q1 FY20 end.

On 2 June 2020, Splitit partnered with BlueSnap to integrate its All-in-One Payment platform to enhance customer and merchant experience on instalment payment operations. The platform integration allowed SPT to enhance sales conversions and average order value.

In April 2020, the Company also secured A$16 million to execute its high-growth strategy of investing in go-to-market, technology resources, supporting existing merchant credit facilities and for working capital.

 


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