What does the APT deal mean for Zip Co valuation?
Hi James,
Will the APT deal rewrite the valuation to Z1P and the sector ? And also people might sell out APT and look to buy other players to have the exposure? Appreciate, your thoughts.
Regards
Sam
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Answer
Hi Sam,
The BNPL space has indeed rallied since Squares $39bn bid for Afterpay (APT) for a number of different reasons such as comparative valuation, further takeover speculation and as you mentioned likely switching from say APT into Z1P shown below. At MM we remain bullish and long the ZIP but also mindful that as consolidation does unfold it will become a case of survival of the strongest as the sector matures hence one where we should avoid complacency.
On the multiple that Square used for Afterpay, Zip’s international business would be worth ~$15 a share, throw in the ANZ business for say $5 a share and in our view, the deal implies Zip is worth $20 all things equal. However, APT is the No1 player in Australia and the No 2 player in the US (behind Klarna) which implies that it should attract a high valuation.
