Why the Afterpay share price could rocket next week

The Afterpay Touch Group Ltd (ASX: APT) share price could rocket next week.

The buy now, pay later provider was one of the businesses under the microscope in the Senate inquiry looking at buy now, pay later businesses and short-term finance business.

According to the AFR, the Senate committee decided that Afterpay and its peers will not have to carry out expensive credit checks before they can join up new customers, however they may need to do work to ensure that their customers can actually afford the debts they are taking on.

We may not have heard the last of it though, the Senate committee recommended that the government should consider what regulatory framework would be appropriate for the buy now, pay later sector.

The main thing that may boost the Afterpay share price next week is that the committee didn’t end up suggesting that Afterpay or its peers be under the scope of the National Credit Act.

The AFR quoted Afterpay’s executive chairman Anthony Eisen as saying “We look forward to working with ASIC, the Government, consumers and industry on a suitable regulatory framework and to achieve the best possible outcomes for our customers, including through continued innovation and improved data sharing.”

Another business which could have been regulated was Zip Co Ltd (ASX: Z1P), its CEO Peter Gray said “We have built the business to ensure we lend responsibly and are well placed to satisfy any future changes to regulation with little or no disruption to our business.”

Foolish takeaway

Another reason why Afterpay could rocket next week is that it is reporting its December 2018 result on Tuesday, 26 February 2019. Whatever the share price does, the growth figures Afterpay reports will probably be impressive. I would wait until then at least before considering a buy.

Afterpay may be trading too expensive for the earnings it is about to unveil, which is why these top ASX shares could be better choices.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Source link Finance News Australia

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