Afterpay - APT.ASX Anecdote

Ant proposed Afterpay as his top pick for 2020 in that recent thread. After some DD, I took an initial position in the company the same day.

Yesterday I am walking out of the Nutcracker show with my wife and two college-age daughters. The daughters reveal that they are about to make a designer clothing purchase and use Afterpay. They apparently love Afterpay and described it, jokingly, as “a better way to go into debt”.

Never ceases to amaze me how they get marketed to and end up “in the know” even though they have no money!

Rob

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Daughters eh?
Can’t live with 'em, can’t shoot them. :smiley:

It would be interesting to know where in the world you live, since I’ve never heard of Afterpay and live in the Czech Republic where it’s either unavailable or poorly advertised.
Which brings me on to another question:
I think that most people assume that all the regular posters here are US based and sorry to say this, but most US based posters have a very US-centric based view of the world.
So would it be a good idea to make a post asking where the regular posters live?
The relevance would be that when a certain service starts being used internationally (my lawyer uses Docusign for instance) then we would all benefit from understanding how our companies are doing when they say that they are growing internationally.
It’s probably going to be dismissed as an off topic post but I don’t think that it is.

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Sorry, I should have clarified, I am based in the USA. Afterpay is in Australia/New Zeland, the US, and the UK (branded as clearpay) as I understand the state of things presently. Theres a whole world out there!

Peter Lynch talked about scaling successful concepts (retail was the topic at hand in his book) being the easiest way to invest. Afterpay appears successful and is scaling to some big markets right now.

Rob

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OT, but please, please teach your daughters how to manage money. -K

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I not sure yet if I buy into the fact that AfterPay begets irresponsible financial habits:

https://www.marketwatch.com/story/why-millennials-are-buying…

Growing up in the hills of West Virginia, one of eight children, most of our family purchases were made the good, old fashioned way…“layaway”! Without access to credit and with very little disposable income, most family purchases outside of milk, bread and other food staples where purchased on layaway. Clothing, furniture, electronics, birthday and holiday gifts were all on layaway; making payments as cashflow allowed. While AfterPay isn’t exactly pure layaway, it does allow the consumer to make a purchase on an interest free installment plan. [Interest fee unless the purchaser incurs late fees.]

Perhaps there is a growing market available for a concept like AfterPay. A world in which a daughter makes a responsible purchase at Urban Outfitters, takes responsibility for that 4 installment payments and does so responsibly while not incurring any interest charge associated with a credit card.

Perhaps AfterPay requires a closer look.

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You lost me at… makes a responsible purchase at Urban Outfitters

What happened to saving up for purchases? If you don’t have the money available, it’s not a responsible purchase, period.

I understand that AfterPay might become popular. I do not think it is responsible shopping. Especially when we’re talking about Urban Outfitters and designer fashions.

AfterPay plays into the instant gratification that youngsters like so much. But responsible? I should think not.

Karen
I grew up on the Fool’s LBYM board, for goodness sake.

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I just might pat my “youngster” on the head for figuring out that they could use somebody else’s money, interest free, and make the 4 installment payments every two weeks to pay off the balance.

Being interest free, I would much rather have 4 cash outflows (i.e. installment payments) at Time Period 0, Time Period 1, Time Period 2 and Time Period 3 as opposed to a cash outflow of 100% at Time Period 0.

I think my “youngster” just figured out the Time Value of Money.

By the way, as a 56 year old grandfather; I no longer have “youngsters” in the house.

Harley

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What happened to saving up for purchases? If you don’t have the money available, it’s not a responsible purchase, period.

I understand that AfterPay might become popular. I do not think it is responsible shopping. Especially when we’re talking about Urban Outfitters and designer fashions.

AfterPay plays into the instant gratification that youngsters like so much. But responsible? I should think not.

Karen
I grew up on the Fool’s LBYM board, for goodness sake.

Hi Karen

For what it’s worth as a Brit having seen household debt and shopaholic trends get as out of hand in the UK if not more so than US and as a fiscally literate and responsible Gen X’er observing out of control consumerism all around my natural tendency is to agree with you, HOWEVER and having proposed Afterpay to the board as my 2020 pick and having lived in Asia witnessing emerging and developed Asia for the last 10 years I have some responses to your comments which read a little emotive and opinion based; (and frankly we have to admit the invention of credit cards and the explosion in debt and emergence of instant gratification happened long before today’s youngsters came a long).

Not sure if you have read some of the Afterpay presentations but they address a lot of what you are talking to.

  1. Afterpay is designed and promoted as a consumer budgeting solution as opposed to a credit facility
  2. Afterpay solutions are aimed at Millennials who have seen Baby Boomer and Gen X generations almost blow the world apart with debt and are adverse to credit cards. Afterpay is enabling Millennials (amongst who up to 50% don’t have credit cards) to spread payments over 4 monthly instalments
  3. Paying over 4 monthly instalments is infinitely better than buying on a credit card, not paying it off immediately and paying 28% APR for outstanding balances
  4. Consumers are not able to access further Afterpay purchases until they have made good on any outstanding instalments
  5. In emerging markets as opposed to US/Europe, cash flow is a massive affordability barrier. Either shrinking SKU portion sizes (e.g. down to sachet size formats) or extending instalment purchasing as an every day solution to address a real affordability issue (even with the ability to repay)
  6. Funding solutions are cultural and the ideas of price/volume offers as well as repayment terms are drivers of purchasing decisions
  7. Afterpay use initial checks for users before extending the solution
  8. Afterpay is used in Australia and NZ beyond anything seen short of debit and credit cards. It has not materialised in debt escalation in those countries.

I personally have made use of credit cards for my own cash flow purposes as well as instalment purchasing offers to buy capital equipment for my business so I can’t fault the logic of using this facility in a responsible way which is an advantageous solution.

Happy new year to all.
Ant

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