The big test of Australia’s still frothy listed tech sector intensifies from today as investor luvvies like Afterpay Touch, Zip, and WiseTech Global come under renewed pressure from suddenly sceptical traders.
A day after consumer credit group, Afterpay Touch raised more than $300 million and the three founders sold shares worth more than $100 million to two US investment companies, the shares plunged 12% after the financial intelligence regulator, AUSTRAC revealed it believes the company had been involved in money laundering.
Morgan Stanley considers the stock oversold amid concerns around the payments review announced by the Reserve Bank of Australia. The RBA will recommence a review of card payment regulations in early 2020.
Citi has initiated coverage of Afterpay Touch with a Neutral rating and $33.70 price target. The analysts hold the view the market might be underestimating the growth levers embedded inside this business model.
Afterpay Touch is required to appoint an AUSTRAC-approved external auditor to look into its compliance with the anti-money laundering regulations. The company must provide AUSTRAC with a copy of the final audit report within 120 days of the external auditor being engaged.
The company has provided key metrics in its Australasian business, along with an update on its expansion in the US and UK. The main positive, for Morgans, was US business, which was substantially higher in terms of sales, merchants, and customers in the second half.