The Afterpay Touch Group Ltd (ASX: APT) share price could get a major boost on news of its UK launch.
According to a report in the Australian Financial Review, the buy now, pay later business is going to use the acquired (ClearPay) brand and technology to launch in the UK.
The AFR quoted the Afterpay executive director David Hancock as saying "We'll be using the same logo and we're using the same tech. One of the reasons why we've done that is that there's a number of issues you need to deal with and the quickest way for us to get into the market is actually use the ClearPay name".
International growth is the key to justifying the current Afterpay share price of $25.61, which would be an end-of-day all-time high for the company. It has risen by an incredible 327% in just a year.
The US expansion is going very well, but ASX investors won't get 100% of the benefit because of the options given to US staff in the Afterpay Inc business. So, the UK business could be increasingly important to justify today's high price.
Afterpay plans to use money raised in Australia to fund the initial growth, but it will be switched to large banks once Afterpay has been launched in the UK.
Mr Hancock also talked about some sticking points in the US. Retailers have a healthy profit margin there and they don't want to give some of that up. You can understand why US retailers might be a bit defensive – why give away margin if you're going to get a similar level of sales? Afterpay would argue it increases sales. But a counter-argument could be that Afterpay is just somewhat bringing forward sales.
Either way, Afterpay continues to get plenty of investor attention. I think the sector is too hot for an investment right now, I think we will presented with a better price over the next 12 months.
