The sky could be the limit for Afterpay (ASX:APT) shares, but don’t expect it always to be a smooth ride


After the early excitement, in mid-morning Friday trading the Afterpay Touch (ASX:APT) share price has come back a little, now up ‘only’ $1.46 or 7.8 per cent to $20.01.

Afterpay shares opened as much as 21 per cent higher.

Forgotten in all the excitement of Afterpay the share price is the bear case for Afterpay the company.

The company has a short trading history, and investors have no idea how bad debts will look over a credit cycle. You can bet your bottom dollar that competitors will be circling, attracted by the $4 billion Afterpay valuation for what is still quite a small company. Afterpay’s revenue for FY18 was just $142 million.

Right now, the stock market is betting that Afterpay can do no wrong. It might be right.

The “buy now, pay later” space only has room for two or three players, one of which will likely dominate the market.

That dominate player in Australia is Afterpay. The race is on for them to dominate the much bigger markets of the US and now the UK. The early signs in the US market are very promising, and the competition is weak.

The sky could be the limit for Afterpay shares. Just don’t expect the Afterpay share price to always go up in a straight line.

Afterpay Touch shares don’t look cheap, but these 3 shares do…

Combining countless hours of research with over 30 years of hands-on stock market investing experience, The Capital Club’s founder Bruce Jackson has just published his definitive list of 3 Cheap and Good ASX Stocks for 2018.

Afterpay Touch was not one of them, but the list does include one tiny gold mining stock, and the company one top fund manager calls the cheapest stock in the ASX 100.

Find out why these 3 Cheap and Good Stocks could be better buys than Afterpay Touch. But you better hurry… these stocks may not stay cheap for long.

See the 3 stocks

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Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at