The Afterpay Touch Group Ltd (ASX: APT) share price surged $1.47 or 6% to $25.64 today after the buy-now-pay-later phenomenon returned to the ASX boards today after going into a trading halt while it raised $317.2 million in new capital from institutional investors at $23 per share due to the strong competition amongst institutional investors for a slice of the placement.
Retail investors will also be offered the opportunity to buy up to $15,000 worth of shares likely at the same $23 price offered to institutions. In theory the retail investors’ applications are likely to get heavily scaled back as there’s just $30 million worth of stock available and the exchange traded price is already more than 10% above the placement price.
In other words shares allocated to retail investors in the placement could immediately be sold at a double-digit percentage profit to suggest the scramble for shares in the placement will be frenetic.
In other news the analysts at Goldman Sachs run the ruler over Afterpay’s business again on June 11, after the group announced the capital raising and updated the market on subscriber growth numbers in Australia, the US, and UK.
As a result of its updated analysis Goldmans is tipping Afterpay shares to hit $27.10 over the next 12 months. This based on a 34.7x profit multiple for Goldmans’ estimate of Afterpay’s FY 2021 earnings per share when taking into account the dilution from the latest capital raising.
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Motley Fool contributor Tom Richardson owns shares of AFTERPAY T FPO and Macquarie Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Macquarie Group Limited. 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.