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Next Growth Wave: Fintech

Feb. 13, 2019 8:30 AM ETPYPL, EWA, SQ8 Comments


  • Fintech payment staging companies are growing 300% p.a.
  • Australia has a small cluster of interesting listed fintech companies.
  • APT is overvalued but Z1P and PPH are worth considering.
  • Competitors emerging for PYPL and SQ.

Is Fintech the next innovation?

Some investors complain about the lack of new innovative companies today. As Peter Thiel puts it, “We wanted flying cars, instead we got 140 characters.” So what is the next wave? Cloud SAAS companies are practically mainstream, and block-chain seems overhyped. We’ve lived in China and seen the impact on an economy of Alipay and Wechat Pay. In China only old people carry wallets now, since a phone is all you need. But what fintech companies and where?

Australia has a small payment fintech cluster

In this article we look at some fintech companies, beyond investor’s normal horizon of the United States. In Australia there is a small cluster of listed fintech companies that have started to explode. Some have made gains of 400% in a year and more than 1,000% on the back of strong revenue and turnover growth. Moreover because Australian companies lack access to large scale V.C. investments, technology companies often need to capital raise through a public listing. So investors can get access to earlier stage companies than in the US, where much of the growth is captured by private investors. Uber or AirBnb are just a few examples.

So, what early stage fintech companies are there in Australia? And how do they compare?

Note: All figures are in Australian dollars unless stated otherwise. At current rates, $100 Australian is about $70 in US dollars.

Afterpay Touch Group (ASX: APT)

The largest and high profile of the three is Afterpay Touch. Afterpay has grown outstandingly fast over the last couple of years. Afterpay provides retailers a solution for customers to buy something now whilst paying for the item in 4 equal installments every 2 weeks, without any fees or interest, except late fees. Afterpay charges up to 4% to vendors, so the cost of the service is invisible

This article was written by

CGP Asset Management manages discretionary trading accounts for clients in a “Global Technology Growth” strategy. This strategy combines quantitative and qualitative elements with a global perspective. The parent company Caterer Goodman Partners was co-founded by Owen Caterer in 2011 as a financial advisory firm, but since 2017 has focused exclusively on discretionary trading accounts on Interactive Brokers.

Analyst’s Disclosure: I am/we are long PPSHY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

We currently have a small position in Pushpay Holdings and may initiate a holding in Zip Co, Z1P over the next 48 hours. We do not have holdings in Afterpay or Splitit and do not have any current plans to buy these stocks.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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