Why the Afterpay Holdings Ltd share price is going nuts today

The Afterpay Holdings Ltd (ASX: AFY) share price has climbed 7% in morning trade to $2.34 after the deferred payment provider reported another strong quarter of growth for the period ending March 31 2017.

Its fees from retailers for providing its services hit $6 million this quarter versus just over $4 million for the quarter ending December 2016, which represents an impressive quarter-on-quarter climb of 40%.

Perhaps more impressive is the fact that Afterpay was not too far off doubling the number of retailers using its services quarter-on-quarter, with total retailers signed up now around 3,500 compared to 2,000 at the end of the last quarter.

The group added the likes of Myer Holdings Ltd (ASX: MYR) and Telstra Corporation Ltd (ASX: TLS) as clients over the last quarter, although the impressive headline or growth numbers are limited by the fact that the company has not as yet revealed its cash flow statement for the quarter.

For the six-month period ending December 31 2016 the business posted a net loss after tax of $1.4 million on revenues of $6 million.

At today’s share price it looks to be on a giant valuation given it reportedly has around 180 million shares on issue. However, the valuation is complicated by the fact the business is due to complete a scrip-based merge with the profitable payment services provider Touchcorp Ltd (ASX: TCH) by late June 2017.

The combined Afterpay / Touchcorp group will definitely be one to watch for investors prepared to take on more risk in pursuit of superior returns. For now though it’s too speculative for me, but I will keep it on the watch list for further research given the strong track records of both businesses.

3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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