Much has been made of the Afterpay Ltd (ASX: APT) share price of late. That’s generally what happens when a high-flying WAAAX growth share makes yet another brand new all-time high. This is precisely what occurred with the Afterpay share price this week, when it hit a new top of $105.80 on Monday.
Earlier this week, we discussed how the competition was heating up for the company, with the entrance of a few new competitors in the buy now, pay later (BNPL) space that Afterpay has made so famous.
However, reminiscent of Mark Zuckerberg’s famous unofficial motto for Facebook Inc (NASDAQ: FB) in the company’s early years – ‘move fast and break things’ – Afterpay is not a company that finds its laurels too comfortable to rest on.
Reporting in the Australian Financial Review (AFR) this week shed some light on Afterpay’s growth plans. According to the AFR, Afterpay co-founder and co-CEO, Anthony Eisen, has told investors that the company wants to “capitalise on its enormous 11-million strong customer base by better targeting young customers and supporting cross-border purchases”.
Afterpay eyes the horizon
Appearing at the AFR’s Banking and Wealth Summit this week, Mr. Eisen is reportedly exploring new ways to monetise the company’s 11 million (and growing) base of customers. One of these ‘ways’ is a plan to allow merchants in one country to sell products in another country, and “providing foreign exchange services to facilitate cross border transactions.”
The AFR quotes Mr. Eisen as stating that these plans, as well as the company’s small but growing presence in Asia, were “early irons in the fire”. However, he also notes that global retailers are “encouraging [Afterpay] to expand into new regions”. These retailers include Chinese e-commerce giant Tencent Holdings Ltd (HKG: 0700), which Afterpay has an arrangement with dating back to May this year. It was also at this time that Tencent, an e-commerce powerhouse in its own right, acquired a large tranche of Afterpay shares. Some of the apps Tencent owns, such as WeChat, have billions of monthly users. However, Mr. Eisen still says that although the two companies have “some fabulous conversations”, the relationship remains at “arms-length”.
Turning to the prospect of future regulation, a bugbear seemingly always on the minds of Afterpay investors, Mr. Eisen was indifferent: “It’s never been a point about avoiding regulation” he told the AFR, noting that ASIC (the Australian Securities and Investment Commission) has a “fit for purpose” approach to the BNPL space. He also praised ASIC for “recognising that Afterpay was differentiated from the broader sector”.
It’s worth noting, however, that not everyone shares this view. The AFR also quotes Commonwealth Bank of Australia (ASX: CBA) CEO, Matt Comyn, who reckons that “regulation is inevitable but not imminent”.
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Returns as of 6th October 2020
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sebastian Bowen owns shares of Facebook. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Facebook. 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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