How to Buy, Sell and Short Afterpay Shares

We examine how investors and traders can buy, sell and short the fast-growing payments company.

How to buy or invest in Afterpay shares

You can invest in Afterpay (APT) in two ways: either through share trading or derivatives trading. Share trading means that you take direct ownership of Afterpay stock, meaning you could potentially profit if the share price increases in value or if the company, however unlikely at this stage, decides to pay a dividend.

By comparison to owning the shares outright, derivatives trading – such as CFD trading – allows you to speculate on the price movement of Afterpay shares without actually taking ownership of them. CFD trading may prove attractive to some investors for a number of reasons, including the flexibility to trade stocks long and short, the ease of which it allows one to hedge, as well as the ability to gain larger exposure to an asset through leverage.

Follow the simple steps below to start investing or trading Afterpay shares:

Investing in Afterpay shares

  1. Create or log in to your share dealing account and go to our trading platform
  2. Search for ‘Afterpay
  3. Select ‘buy’ in the deal ticket to open your investment position
  4. Choose the number of shares you want to buy
  5. Confirm your purchase and monitor your investment

Trading Afterpay shares

  1. Create or log in to your trading account and go to our trading platform
  2. Decide whether CFD trading is right for you
  3. Search for ‘Afterpay
  4. Choose your position size
  5. Open your position and monitor your trade

Learn more about CFD trading here.

How much would it cost to invest in Afterpay?

When trading Australian stocks such as Afterpay online, investors will incur the following charges:

Number of trades (in previous month)

Commission per trade*

3+ trades

$5 / 0.05%

0-2 trades

$8 / 0.1%

By comparison, when trading derivatives – such as share CFDs – you deal at the real market price, so we don't attach our own spread. Instead, we take a small commission when you open the position, and again when you close it. In each instance, a minimum charge, as outlined below, applies:

Share category

Commission
per side

Minimum charge
(online)

Minimum charge
(phone)

Minimum retail margin requirement

Minimum professional margin requirement

Australia

0.08%

$7

$7

5.00%

4.00%

How to sell and short Afterpay shares

After investing in Afterpay, you might want to sell your position if the share price starts to fall or if you find a better place to allocate your capital. Alternatively, you hold the opinion that Afterpay’s share price will decline in value and as such you may want to short the stock through CFDs, potentially allowing you to generate a profit from falling prices.

This, as with opening a position with IG, can be done in just a few simple steps, described below:

Selling Afterpay shares

  1. Create or log in to your share dealing account and go to our trading platform
  2. Search for ‘Afterpay
  3. Select ‘sell’ in the deal ticket to close your investment position
  4. Enter the number of shares you want to sell
  5. Confirm the sale

Shorting Afterpay shares

  1. Create or log in to your trading account and go to our trading platform
  2. Search for ‘Afterpay
  3. Choose your position size
  4. Choose ‘sell’ in the deal ticket to go short and speculate on the price falling
  5. Confirm and monitor your short position

Afterpay share price: the basics

Afterpay trades on the ASX 200 under the ticker Afterpay and is classified as a Software & Services company under the GICS industry group classifications. Though a relatively young company, Afterpay is an ASX 200 constituent and, with a market capitalisation of over $25 billion, at the time of writing, making it one of the largest publicly listed companies in Australia.

With a market cap edging towards $26 billion, Afterpay also represents one of the largest Buy Now Pay Later (BNPL) companies in the world. By comparison, Swedish fintech player Klarna – which also has a BNPL offering – in its most recent funding round hit a valuation of around US$5.5 billion. Other Australian-listed BNPL companies include: Zip ($2.96 billion), Sezzle ($1.74 billion) and Splitit ($587 million), at the close of Tuesday, 25 August.

Afterpay key personnel: who manages the company?

Name

Title

Anthony Eisen

Chief Executive Officer & Managing Director

Nicholas Molnar

Co-Founder and US Chief Executive Officer

Frerk-Malte Feller

Global Chief Operating Officer

Luke Bartoli

Global Chief Financial Officer

Mark Teperson

Global Chief Strategy Officer

David Katz

Chief Product Officer

Geoff Seeley

Global Chief Marketing Officer

What is Afterpay’s business model?

Afterpay’s business model is neither particularly new nor overly complex. Representing an updated lay-buy service, Afterpay allows users to purchase items and pay for them over four evenly divided instalments. In spite of its simplicity, the company has witnessed exponential growth over the last few years as a result of a two-sided network effect – driven by equally enthusiastic customers and merchants.

As Li Jin and D'Arcy Coolican, from venture capital firm Andreessen Horowitz noted:

‘For two-sided marketplaces such as Airbnb, eBay, and others, the organic share of new users grows as more suppliers (housing, sellers) and buyers want to join the network to get access — because of the potential revenue and variety of choice there.’

Besides benefitting from strong network effects, Afterpay often touts the customer-centric nature of its business model as a cornerstone of its success. This philosophy is well reflected in the company’s financials, with the majority of Afterpay’s income made up of merchant fees, while a less significant portion is derived from customer late fees. A key statistic for monitoring Afterpay’s profitability is its net transaction margins (NTMs), represented as a percentage of underlying sales, which has historically floated around 2%.

Fundamental analysis: how to analyse the Afterpay share price

Afterpay, like many early-stage growth companies, may prove difficult to value from a fundamental perspective due to its explosive growth profile. Indeed, off the back of this lofty growth and even loftier market expectations, the stock has come to trade at nose-bleed multiples in recent times – in many cases well ahead of its global technology peers. Valuation concerns however hasn’t stopped investors from bidding the stock higher – with the Afterpay share price up ~200% year-to-date.

The following metrics, taken from Afterpay's most recent trading updates, are unaudited and subject to change.

Metric

Description

Current

Growth rate (YoY)/ Notes

Underlying Sales

The value of all the transactions processed in the Afterpay ecosystem.

$11.1 billion

+112%

FY20 Revenue estimate*

Made up of Afterpay’s income, Pay Now revenue and Other income.

$508 million

+92%

Net Transaction Margin (NTM)

A measure of profitability proportional to underlying sales.

~2.25%

Recently upgraded

Earnings (EBITDA)

A company’s profits before interest, tax, depreciation and amortisation.

$44 million

Up from $35.5m pro forma EBITDA in FY19

Customers

The number of customers in the Afterpay ecosystem.

9.9 million

+116%

Merchants

The number of merchants in the Afterpay ecosystem.

55.4 thousand

+72%

*Revenue estimate taken from marketscreener.com.

Publication date : 2020-08-26T01:48:28+0100


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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