Square to acquire Afterpay for $29B

Post by mustardo » Mon, Aug 02, 2021, 12:55 AM UTC

kevindong wrote: post #80

hn_throwaway_99 wrote: post #26

I've just come to accept that I'll never understand corporate finance. Based on the data I could find, this works out to a sales price of about 76 times revenue for Afterpay. Even for a fast growing company, how can they ever grow into that valuation? Of course, it's an all stock deal, so perhaps it's better to just consider what percentage of Square they're giving to Afterpay stockholders, but I still just can't wra…

The acquisition is entirely in stock, so very little actual cash is changing hands. According to the Afterpay investor relations site, Afterpay's gross revenue for FY21 (ended June 30, 2021), assuming constant currency exchanges rates, was $978 million AUD [0]. If you subtract out the first half of FY21's revenue ($385.2 million AUD) [1], we arrive at an implied revenue of $592.8 million AUD for the second half of FY…

Post by jokethrowaway » Mon, Aug 02, 2021, 1:02 AM UTC

Clewza313 wrote: post #74

shell0x wrote: post #58

As a foreigner in Australia, I can't help but to think that Australians really don't know how to handle finances and are too irresponsible to use a credit card, so Afterpay and Zip stepped in. Maybe it's because I grew up in Europe, but "Don't buy it if you can't afford it" has served me well. The majority of people I know just use credit cards for the perks but never miss a full payment.

Australia has gone 20+ years without a recession, meaning many people have grown up without ever seeing anything except full employment and house prices going up up up. It's thus been a "safe bet" to leverage yourself up to your eyeballs to get on that "property ladder", and while many (including myself) thought this would finally pop last year with COVID, nope, after the briefest hiccup the property market has gone…

Post by jokethrowaway » Mon, Aug 02, 2021, 1:03 AM UTC

wonnage wrote: post #82

phist_mcgee wrote: post #50

Earlier quoted context omitted.

Trickily, BNPL is pushed as 'not credit', which I find deeply disingenuous. The product they push is utilised by compulsive spenders, or poorer people. These people have always used credit, much to their collective disadvantage. Branding it as 'like lay-by, free up your cashflow' is in my opinion a dangerous option for many people.

It's rather paternalistic to assume poor people can't handle credit.

Post by Andys » Mon, Aug 02, 2021, 1:08 AM UTC

AussieWog93 wrote: post #32

treelovinhippie wrote: post #23

Square is buying a loan shark service. "The Australian Securities and Investments Commission found one in five buy now, pay later users is missing payments, half of users aged between 18 to 29 cut back on essential items to make repayments, and more than 1.1 million transactions in 2019 incurred multiple missed payment fees. It also warned 15 per cent of users, and half under 29, had taken out an additional loan to p…

Are Afterpay really to blame for this? Credit cards have been around since the 80s and are far more predatory. Pawnbrokers have been around for centuries. Even without debt, so many people have an impulse to spend as much as they can and put themselves in a financially precarious situation where one emergency bowls them over. I'm not saying Afterpay are ethical, but I'm sure you'd find a similar amount of people fore…

Post by catmanjan » Mon, Aug 02, 2021, 1:09 AM UTC

siquick wrote: post #70

shell0x wrote: post #58

As a foreigner in Australia, I can't help but to think that Australians really don't know how to handle finances and are too irresponsible to use a credit card, so Afterpay and Zip stepped in. Maybe it's because I grew up in Europe, but "Don't buy it if you can't afford it" has served me well. The majority of people I know just use credit cards for the perks but never miss a full payment.

I’ve lived in Australia for 10 years and still cannot believe how flippant people here seem to about getting into debt. Tens of thousands of dollars of credit card debt, a mortgage covering 60% of a salary, and a leased car seem to be fairly standard for a lot of my peers. It feels like they’re all 3 missed months of salary away from having absolutely nothing. Obviously all anecdotal but still astounding and probably…