The Afterpay Touch Group Ltd (ASX: APT) share price has risen closer to $30 in response to its announcement today.
Afterpay Touch is the owner of the popular “buy now, pay later” app. As of early 2019, Afterpay had over 3.5 million registered users worldwide, making it one of Australia’s true technology success stories.
Here’s What Afterpay Announced
The buy now, pay later business revealed that it has signed a US$300 million receivables funding facility with Citi to support the growth of Afterpay’s US subsidiary.
The purpose of the new facility is to access external funding to fund US annual sales of more than US$4 billion in annual underlying US sales.
This US facility adds to the existing $500 million Australian receivables facility and the NZ$20 million facility. Afterpay also pointed to its strong corporate balance sheet and liquidity position as a key element of Afterpay’s near-term capital management strategy.
It will operate in a similar fashion to the Australian debt facility and the length of the debt term is two years.
Afterpay said that geographically diversifying the company’s debt funding sources is an important step for the company.
Will The Afterpay Share Price Hit $30 This Year?
Having started the year at $12 it is now $27.50, which is a massive 130% in just a few months.
Every time Afterpay unveils another piece of good news investors get more excited and give the company a tick.
But things aren’t quite as plain sailing as some people would say, or the share price indicates.
We recently learned that ASX Afterpay shareholders may only own as little as 90% of the US Afterpay business, which means the US projections for Afterpay may not be as fruitful for the share price on the ASX.
There are also a number of competitors who want to steal market share in the buy now, pay later industry like Zip Co Ltd (ASX: Z1P), Splitit Ltd (ASX: SPT) and Sezzle.
I would much rather think about one of the reliable ASX shares in the FREE report that are probably better value than Afterpay.
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