We saw amazing gains of Afterpay (APT) , rallying through $88.3 from $12.44 in span of just 6 months, what does it really say, the company cannot turn around in such a way so as to get 613.42% jump in their share price, let’s dive into this .
The company APT had a humble beginning starting out from $2 a share to $38 in three years, slowly making progress and putting its foothold in various market across the globe. The company currently is trading at $75.80 , which. according to our studies is 200% overvalued, the company’s P/E ratio is negative, as the company is unprofitable till now.
So what does the stock price , say about the company ?
There is an tendency of humans to become over-optimistic about the future , we in-fact put all in line if we see something worth it, one of the first psychological reason for company’s share to trade so high, the investors are overly bullish about the company. Lets see some fact to get few things straight
1. Work from the competitors – The company is currently positioned as number one company in terms of its market cap and its till year performance , the company has many competitors which are inline to take away the market share from afterpay, it is advisable to wait for the company to get such a foothold in the market ,so that market share remain intact through years, according to us its a new market and many competitors like Zip , Sezzle , Splitit are in line to be the king.
2.Growing segment – The segment of BNPL is growing and is expected to pass 4 million in next three years, the segment is growing and its the right time to put your funds in these stocks to see the magic of growth. According to us, Afterpay is overvalued and it should be ignore till the time it hits around $35-40 range, above anything that is mere speculation and over optimism in the market. As, i have read somewhere , its not who starts his thing first wins, is he who even starting late gives his best, wins it. We are still searching for the other he.
3. Big Banks , steps into interest free cards – As mentioned above the segment is red-hot, the top 3 banks in Australia are stepping into the new challenge seeing the majority shift in buying behaviour and pattern from the consumers. The companies including NAB , CommBank ,Westpac have started their own kinds of interest free credit card , charging some account fee. More details can be found on their respective websites.
Imagine yourself with 5 enemies on a battlefield, fighting for the blood , to win to conquer and to register yourself as the king , how muddy and bad its going to get, the same is this segment its new its valuable and there is no king at the top ,except our provisional King Afterpay, everybody wants their market share, its too early to justify who can be the king of this palace(BNPL).
What we can understand that , its not advisable to put your money in only of the member Afterpay , against its real value , which is around $35-40. The investors should explore other option and see which other companies have what advantage over the others.
Afterpay is overvalued at the current price.