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The AfterPay share price is sinking ahead of a potential trading update

Credit: Chris Potter

The AfterPay Touch Group (ASX: APT) share price is down 4.2% to $12.96 today despite the buy-now-pay-later start-up releasing no news to the market.

The AfterPay share price is volatile as it’s a difficult business to value given its hyper-growth and lack of profits framed against a fast-moving news flow of potential regulatory change impacting its business model.

That aside it’s possible the group will deliver a trading update for the quarter ending December 31 2018 this week, with it handing in an update for the prior corresponding quarter on January 16 2018.

Afterpay’s business model has caused controversy amongst some more self-righteous observers as it’s thought to encourage reckless spending amongst Millennials, while it doesn’t have the same regulatory restrictions as a credit card provider for example.

The below email suggesting broke students can solve their cash flow problems by buying another pair of trainers using credit effectively extended by AfterPay….

Source: Platypus Shoes email, Jan 13, 2019.

The Christmas quarter is especially important for retailers and AfterPay is likely to have enjoyed more strong growth with much investor attention now on its progress in the giant U.S. retail market. Of course the market is already pricing in a lot of growth for the business with it valued at more than $3 billion based on 234.2 million shares currently on issue.

Other areas for investors to look out for in terms of any trading update are progress in the UK market and whether growth in Australia is starting to level out thanks to a saturated market.

Motley Fool contributor Tom Richardson owns shares of AFTERPAY T FPO. You can find Tom on Twitter @tommyr345 The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Scott Phillips.

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