Afterpay: buy now (online), pay later


Afterpay allows people to buy products online now, but only pay later.

I can imagine why people use this service. For example, if David receives his salary on the 31st of this month, he can do online shopping before then and just repay once he received his salary. The cool factor is that you don’t pay interest on your debt if you pay on time.

Personally, I would probably never use this service as I am not a fan of having debt, even if it is short term debt. However, Afterpay currently has almost 10 million active users with operations in Australia, United Sates, New Zeeland, and the United Kingdom.

FY20 key metrics:

  • Underlying sales growing 112% to $11.1 Billion.
  • Active customers up 116%,
  • Will be non-profitable for next few years, as they focus on expansion and gaining market share.

Business model:

  • Repayment terms = up to 8 weeks
  • Customer fees 10$ for initial missed instalments +7$ if missed again.
  • Merchant fees = 4.6% +0.3$

They make revenue through charging merchant and customer fees, which means the higher the volume, the better for Afterpay.


  1. Regulation
  2. Competition risk can put pressure on margins.

Share info:

Share price: $71
Market Cap = $19.74Billion AUD
Year-to-Date share performance = +131.7%

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My opinion:

The first question you can ask yourself is, “Will I ever use a service like Afterpay’s?” If yes, ask yourself if you think Afterpay is most likely to win? This is definitely a high growth stock with a lot of potential!

The price is quite priced for perfection, if Afterpay misses estimates it can trigger a sell-off. It is a company with long term potential, especially as they are now focusing heavily on scaling the business.

I would love to own some Afterpay shares, but just at a lower price to be honest. So, my plan is to buy a small portion now and add more shares, if there any dips in the future.

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Higgo van Biljon
Easy user, Founder & CEO FinMeUp

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