Australia’s youngest self-made billionaire has thrived during the Covid recession of 2020.
Nick Molnar – the co-founder of buy now, pay later app Afterpay – last week saw his company join the ranks of the top 20 on the Australian Securities Exchange.
At just 30, he was the youngest entrant on this year’s Australian Financial Review Young Rich List with an estimated worth of $2.2billion.
In a tumultuous year, Afterpay’s share price plunged from $40 in late February, as the share market peaked, to just $8 in March as businesses were forced to close to stop the spread of coronavirus.
Australia’s youngest self-made billionaire has thrived during the Covid recession of 2020. Nick Molnar – the co-founder of buy now, pay later app Afterpay pictured with his wife Gabrielle – last week saw his company join the ranks of the top 20 on the Australian Securities Exchange
The worst economic downturn since the 1930s Great Depression saw Australia plunge into its first recession in 29 years.
Despite that, Afterpay’s share price has surged 15-fold in nine months, reaching a record-high of $122 on Tuesday as its price climbed by 5.3 per cent in one day.
Afterpay, which listed on the ASX in June 2017 with a share price of just $1, on December 21 overtook Insurance Australia Group, the owner of NRMA and CGU.
Mr Molnar, who previously sold jewellery online, and his former neighbour Anthony Eisen founded Afterpay in 2014 and they are both now the co-chief executives.
Their creation has taken the old-fashioned idea of lay-by, where customers pay off a good in installments.
The alternative to credit cards, with their high interest rates, has proven popular with Millennials.
At just 30, he was the youngest entrant on this year’s Australian Financial Review Young Rich List with an estimated worth of $2.2billion
Instead of compounding interest charges, Afterpay app users are instead charged fixed late fees.
IG market analyst Kyle Rodda said Afterpay’s phenomenal rise was an example of ‘narrative economics’ where a good idea excited investors.
‘If you look at these sorts of ideas, the ones that are really saleable from an investor’s point of view, are ones where when somebody explains it to you, you go, “How the hell didn’t I think of that myself?”,’ he told Daily Mail Australia.
‘Afterpay, from a narrative point of view, everyone understands the concept, we’re all familiar with lay-by – they’ve revolutionised it a little bit and brought it into the 21st century.’
Despite the popularity with shareholders – and a market capitalisation of $34.8billion – Afterpay is yet to post a profit since it listed on the ASX three years ago, making a loss of $26.8million in fiscal 2020.
Afterpay also has competitors in Humm, Laybuy, Openpay and Zip Co.
The worst economic downturn since the 1930s Great Depression saw Australia plunge into its first recession in 29 years. Despite that, Afterpay’s share price has surged 15-fold in nine months, reaching a record-high of $122 on Tuesday as its price climbed by 5.3 per cent in one day
The euphoria with Afterpay’s record-high share price didn’t last with its value falling by 2.8 per cent to $118.56 during the first hour of trade as the broader S&P/ASX200 dropped by one per cent to 6,637.40 by 11.05am AEDT.
Mr Rodda said Afterpay was significantly overvalued and could fall by up to 30 per cent if interest rates went up from existing record lows of just 0.1 per cent and a new competitor did a better job.
‘You look at the risk curve and a stock like Afterpay is really close to the top of the risk curve when it comes top of the risk curve when it comes to investing,’ he said.
‘When you buy, you have to expect there’s going to be some turbulence along the way and you might get kicked up the bum a couple of times when holding the stock.
‘You are at the whims of the market that is very sentiment driven: a stock like that can go down 20, 30 per cent in a month and then bounce back another 10 to 15 per cent and continue to go to record highs.’
Afterpay was likened to Elon Musk’s American Tesla electric car company.
