The Afterpay Touch Group Ltd (ASX: APT) share price finished today up 11% today after a promising update.
The buy now, pay later business reported earlier today that it has been busy building its operations in Australia and US.
In the US it reported it has achieved year to date underlying sales of $115 million with over 300,000 consumers and over 900 retailers. It also has 1,300 retailers that have signed agreements or in the process of integrating onto the platform.
Management believe that its US retailer clients, that are live on the Afterpay platform, have a bigger total addressable market than the total online apparel market in Australia. It has achieved more in the US in six months than what it did in the first two years in Australia.
At the moment Afterpay is targeting a FY19 earnings before interest, tax, depreciation and amortisation (EBITDA) loss in the US of around $20 million.
The UK expansion is going to plan and management believe that it won't take anywhere near as much investment to get going as the US.
In Australia things continue to go well with more than 90% of underlying sales coming from repeat customers. Net transaction losses remain less than 0.5% of underlying sales.
Afterpay has signed up a number of ASX-listed businesses recently including Pacific Smiles Group Ltd (ASX: PSQ), Kogan.Com Ltd (ASX: KGN), Village Roadshow Ltd (ASX: VRL) and Lovisa Holdings Ltd (ASX: LOV), as well as other businesses like Best & Less and Bonds.
Foolish takeaway
Investors were clearly pleased with today's update. It has recovered some of the lost share price ground due to regulation worries and general market falls.
Afterpay does offer a differentiated model compared to its competitors, so if there are to be additional regulations then Afterpay may be affected less than its peers and therefore be a net beneficiary.
However, despite falling from above $20 I think it's still trading expensively at 68x FY20's estimated earnings.
