Pratyush Rastogi of Farrer Wealth Advisors based out of Singapore provides a great bull case, as well as what he believes the market is missing, for Afterpay and why he isn't worried about competitors such as Paypal entering the market. I'm posting this to Twitter so please excuse the formatting.

https://www.farrerwealth.com/research

https://player.fm/series/capital-employed-fm/investing-in-fast-growth-industries

January 2021 APT Thesis

BNPL company

4 instalments

0 interest

Nominal late payment fee

No debt spiral as you'd see with credit cards

Merchant charged 4-6% of sale value

Merchant value proposition

30-50% growth in basket sizes

Increase in average order value

More repeat customers

Bank of America Research

BNPL market by 2025 up to $1 trillion

Still a long runway for growth 7-8x

Aren’t all BNPL the same?

What the market misses

$APT shop directory

Through their app you can explore every merchant on APTs platform

Becomes discovery

Friends wife was using APT as entertainment during lockdown

Trying to discover new shops/things to buy

$APT sends >14M leads to merchants every month

Why is that so powerful for merchant?

Merchant unit economics

Example

Customer spends $10

COGS 50% = $5

Sales & marketing $2

Delivery etc $1

Operating profit = $2

Generic BNPL acquiring customer at end of check out

Customer spends 30% more = $13

COGS 50% = $6.50

Sales & marketing $2

Delivery $1

Operating profit = $3.50 has increased 75%

$APT

Same as generic but because APT sends you the lead for free

Marketing goes to $0

Operating profit = $5.50

Vs

$3.50 generic BNPL

Vs

$2 no BNPL

By having the active shop directory & the app as a point of discovery

APT becomes super powerful

And this is why they weren’t worried when Paypal entered the market

No one uses Paypal as a point of discovery

In BNPL the best strategy is to win the customer way before checkout

^This is what the market gets wrong about APT & why they’re different

Still believes there is lots of growth ahead of it