The Secret Broker: RIP AfterPay, welcome to the world… BirthPay
The Secret Broker
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After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.
Well, Thursday was a big day for the ASX.
Afterpay (ASX:APT) was suspended from the ASX on Wednesday night, having drawn its last trading breath at $66.47, giving it a valuation of ~$20bn.
Its all-time high was $159.50, which it reached on 10th February 2021, when the Buy Now Pay Later (BNPL) sector was running at its hottest.
Then on Thursday, APT shareholders were able to view their new bedfellow, Block Inc, under the ASX ticker of SQ2. The reason for the weird ticker given to it is because the company was formerly known as Square Inc and not Block Inc.
In the wisdom of Jack Dorsey, the eccentric co-founder of Square Inc, he decided that a name change was required to clear up any confusion on what the company actually did.
This is what was stated in their press release at the time:
“The name has many associated meanings for the company — building blocks, neighborhood blocks and their local businesses, communities coming together at block parties full of music, a blockchain, a section of code, and obstacles to overcome”
So there you go. That clears up all the confusion.
Please feel free to reach out to me after anyone out there actually attends a ‘coming together at block parties full of music’, so I can compare notes with one of my ‘Spotify parties’.
Maybe the music goes to 11pm at a block party, whereas my Spotify party is restricted to 10pm. Who knows?
Anyway, the early investors in APT will be on the dance floor, whooping it up whilst the later investors will be propping up the bar, before security escorts them off the premises and into an Uber, home.
The smarts at APT have done a magnificent job, by digitalising Layby and turning it into a $20bn story and then cashing/swapping everyone out into a US$83bn dollar giant and getting the ASX to list their Block equivalent shares locally in Australian Dollars.
In my experience, whenever this happens, the shares listed on a secondary exchange will always trade at a discount to their main exchange share price.
Not helping the local BNPL sector along over here was the IPO of Beforepay (ASX:B4P), which crashed 42% on its debut.
So, there you go. All that red-taped information that had to be included in Beforepay’s prospectus (too lazy to read) now means absolutely nothing to those that subscribed for those shares.
The thing that tickled me pink about Beforepay’s pre-IPO raising (Jan 2021) was the fact that they boasted about how only 3% of their customers default on the money given to them by the company.
Now, are you sitting down? Because Beforepay limits how much they will pre-advance to a customer’s upcoming pay packet.
The sum is… wait for it…
Considering that they had about 200,000 customers pre-IPO, it’s nice to know that out of them all, only 6,000 struggle to repay $200.
I can only presume that their customer base must be all the spotty-faced kids who slave for McDonalds and KFC, and not an array of doctors and top surgeons, who are defaulting.
With any luck, this disaster of a debut will halt anyone who comes up with the bright idea to actually burden children with all their pre-birth expenses whilst they are still incubating in their mother’s womb and register the business name ‘Birthpay’.
All tooth fairy money and pocket money earnt would go towards paying back funds advanced to their parents pre-birth (ultrasound, cots, baby monitors, spare bedroom spruce up etc) and then, when they finally went to work for McDonalds or KFC, they could advance to finalising all outstanding debt with a Beforepay loan.
Then it would be onto HECS, then onto a mortgage and finally a pre-paid funeral.
This way, they could truly be cared for from the ‘cradle to the grave’ but in a more modern non-government way.
Debt, with a dash of fees on the side, if you like.
Would you like chicken salt with that? Do you have Eggpay?
Please drive through.
Feel free to contact him with your best stock tips and ideas.