The Splitit Ltd (ASX: SPT) share price is on the move following the release of its half year results.

At the time of writing, the payments company’s shares are down 2% to $1.79.

How did Splitit perform in the first half?

As with almost all buy now later providers such as Afterpay Ltd (ASX: APT) and Zip Co Limited (ASX: Z1P), Splitit was a positive performer over the last six months.

For the half ending 30 June 2020, Splitit recorded a 133% jump in merchant sales volume (MSV) to US$89.1 million. This led to the company reporting a 244% increase in gross revenue to US$3.1 million for the six months.

Key drivers of its growth were increases in customer numbers and merchants. At the end of the half, the company had 149,000 active shoppers on its platform, up 28% on the prior corresponding period. Growing at a stronger rate, albeit from a very low base, were its active merchants. They are now 519, up 92% on the prior corresponding period. Since the end of the period, Splitit has signed up a further 116 new merchants.

Also improving was its repeat shoppers metric. Approximately 11.2% of shoppers that made a purchase in the first half have previously made a successful purchase. While this trails its peers materially, with an average order value of US$845, up 59% from US$531, these purchases are likely to be much less frequent than what Afterpay and co experience.

What else happened in the half?

During the half the company signed partnerships with Stripe, Visa, and Mastercard to accelerate innovation and merchant acceptance.

Management advised that these partnerships are progressing well.

In addition, Splitit integrated with B2B and B2C payment platform Blue Snap, and further enhanced its integration with open-source e-commerce platform, Magento.

Outlook.

Management advised that its growth is expected to continue in the second half and beyond.

It commented: “Splitit has a compelling consumer and merchant offering that is resonating strongly in the current environment. This has seen it deliver record MSV and Gross Revenue results, despite challenging global conditions.”

“This growth is expected to continue in H2 FY20 and beyond as its new partnerships with leading global organisations, Stripe, Visa and Mastercard, help to drive innovation in the buy now pay later space, improve the customer experience, and to accelerate the global acceptance of Splitit with new merchants. This growth will be supported by the Company’s enhanced leadership team and new brand identity,” it concluded.

More reading

• Why Splitit and these ASX shares just hit new highs
• Are BNPL shares like Afterpay officially recession proof?
• Should you invest in Splitit shares?
• MoneyMe share price surges, but is it sustainable?
• Have $2,000 to invest? Try these 2 ASX growth shares today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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.

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High paying ASX dividend shares can be difficult to find. However, if you look hard enough, there are some great deals on the ASX. The beauty of a dividend, once declared, is that it’s almost 100% certain to be paid. I believe all the companies discussed below represent solid investments and, furthermore, their dividend payments are higher than average.

It’s important to note when buying dividend shares that the purchase must be made prior to the ex-dividend date in order to qualify for the next payment. After this date, the buyer is not eligible to receive the next dividend. Also, bear in mind the practice of dividend harvesting. This is a tactic in which investors will buy shares to get the high yield payment, and then sell immediately as the share goes ex-dividend.

Nonetheless, I am confident these shares will continue to rise over the near term. So if you are willing to hold them for 3 – 6 months, you should also see a small level of share price growth.

One share to buy today for a 6.67% yield

Ashley Services Group Ltd (ASX: ASH) is a human resources consultancy offering training, recruitment and labour hire services. It has multiple brands operating in each vertical, and is also a registered training organisation (RTO). The company published its FY20 annual report on Friday, and correspondingly its share price jumped by 6.5%.

Over the past 5 days, the Ashley share price has risen by 10.9%. Nonetheless, the company is still selling at a price-to-earnings (P/E) ratio of 9.48. From its current report, and prior history, I believe this is a good small cap to own. It continues to increase sales and to build its footprint. In addition, the company has no borrowings and plenty of cash on hand. 

Based on Friday’s closing price, this ASX dividend share will yield 6.75%. However, it goes ex-dividend on 1 September, or tomorrow. So if you are going to get this dividend, there is little time to waste.

One ASX dividend yield of 12.5%

This ASX dividend share has only recently come onto my radar. Base Resources Limited (ASX: BSE) is a successful mineral sands company operating in Kenya and Madagascar. It has found an ore body that has a very low strip ratio, that is, a low waste-to-product ratio. Moreover, in the past month, the Base Resources share price has risen by 29.1%. 

The company’s net profit after taxes (NPAT) for FY20 was $39.6 million. This was a slight reduction on 2019 due to reducing ore grades where it is producing. Nevertheless, the company intends to produce 700 kilo tonnes in FY21, an increase of 50.2%. 

This year will be the company’s maiden dividend payment. Based on Friday’s closing price, this dividend will yield 12.5%, which is a large payment by any standards. From my investigations, Base Resources appears to be a company that delivers on its promises. As such, I think it’s a good investment regardless of the payment. 

The share goes ex-dividend on 18 September. 

A beautiful company to buy before Wednesday!

One look into the financials, website or buildings of Sunland Group Limited (ASX: SDG) and you will see a company obsessed with beauty. The entire company and its products reflect minimalism, with sleek lines, soft angles and the reinforcement of architecture as art. This small cap is valued at $194 million and is a residential property developer with a difference. I have to admit, I find the company’s aesthetics highly appealing.

However, Sunland has not had a great year due to coronavirus. It has seen statutory net profits after tax reduce to $2.4 million due to one-off write downs. Nevertheless, gearing is still low at 33%, and the company is set to see a great improvement in FY21. At present, it has a net tangible asset value of $2.56 per share, yet is selling at $1.42. 

If you purchase this ASX dividend share before Wednesday 2 September, then based on Friday’s closing price, it will pay a yield of 7.04%. Aside from its dividend, I also believe Sunland Group will be a good company to own over the medium term in general. 

More reading

• 3 under the radar ASX growth shares to buy today
• 3 ASX dividend shares to buy before it’s too late

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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The Cooper Energy Ltd. (ASX: COE) share price is one to watch after the oil and gas producer reported a 150% slump in underlying net profit after tax (NPAT) this morning.

Why is the Cooper Energy share price on watch?

Cooper Energy reported a full-year underlying net loss after tax of $6.6 million for the year ended 30 June 2020 (FY20).

That’s despite production levels climbing 19% higher to 1.56 million barrels of oil equivalent (MMboe) with sales revenue edging 3% higher to $78.1 million.

Underlying earnings before interest, tax, depreciation, amortisation and exploration expense (EBITDAX) fell 14% to $29.6 million. Cooper Energy reported a 611% drop in statutory NPAT, resulting in an $86.0 million loss.

That included a $107.5 million impairment charge announced on 25 August as part of $79.4 million in net significant items after tax.

The Cooper Energy share price is one to watch in early trade following the results announcement. Despite soft earnings, the oil and gas producer reported a 134% surge in cash flow from operations to $48.1 million.

Net debt also increased by 81% to $97.8 million with cash holdings down 20% to $131.6 million.

The coronavirus pandemic sparked an oil price war in March which has put operating margins under pressure. However, Cooper Energy’s gas strong gas revenue helped to offset the $8.7 million decrease in oil revenue for the year.

Prior to this morning’s open, the Cooper Energy share price was down 45.1% for the year. Shares in the oil and gas company closed at $0.34 per share on Friday, having set a new 52-week low of $0.33 in Thursday’s trade.

Outlook

Management is forecasting excess supply in the liquid natural gas (LNG) market for 2020-2021 which will put downward pressure on prices.

However, in the medium term (2022-2023), Cooper Energy sees supply tightening as output declines.

The Cooper Energy share price will be one to watch this morning after also providing guidance for FY21.

The Aussie energy group is forecasting significant exploration and development cuts across its portfolio. Otway capital expenditure is expected to fall from $44.3 million in FY20 to 33-38 million this financial year.

Overall capital expenditure is expected to fall from $76.7 million to $50-58 million in FY21.

More reading

• Last week’s worst performing ASX shares
• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower
• These were the worst performing ASX 200 shares last week
• The next battle facing these ASX stocks will come from within

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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The Temple & Webster Group Ltd (ASX: TPW) share price is on watch today after the online retailer delivered record full year results. Consumers spending more time at home have increased spending on homewares while the coronavirus pandemic has prompted a shift to online shopping. These twin trends have benefitted Temple & Webster, driving sales to record levels.  

What does Temple & Webster do?

Temple & Webster is an online-only furniture and homewares retailer. Australia’s largest e-commerce company in the furniture and homewares space, Temple & Webster sells more than 180,000 products from hundreds of suppliers. The company operates a drop-shipping model where products are sent directly to customers by suppliers. This reduces the need to hold inventory and complements a private label range sourced directly by Temple & Webster. 

How did Temple & Webster perform in FY20? 

Temple & Webster saw sales and revenue accelerate over the course of FY20. Full year revenue was $176.3 million, up 74% year on year. Second half revenue was up 96% on the prior corresponding period while Q4 revenue was up 130%. Active customers grew 77% year on year to reach 480,000 and the company had its first $2 million day in June. Full year EBITDA was $8.5 million, up from $1.5 million in FY19. This gave net profit after tax of $13.9 million, which included an income tax benefit of $5.9 million. 

CEO Mark Coulter said:

Our strategy of being a category specialist, with a clear customer offering built around the biggest and best range of furniture and homewares in the country, combined with the most inspirational content and services and a great delivery experience and customer service, is working. The advantages of being the online market leader are apparent as we continue to grow our market share. 

What is the outlook for Temple & Webster? 

FY21 has started strongly for Temple & Webster, which reached the 500,000 customer milestone in July. Revenue grew 161% year on year to 27 August, with trade ~160% up in both July and August. EBITDA for July and August is estimated to be ~$6 million. The mobile app has been launched in the app store and the company’s second national television campaign will start at the end of Q1. The company had cash of $81 million and no debt as at 27 August, thanks to a recent $40 million placement. This leaves it well funded to pursue its growth objectives. 

The Temple & Webster share price was at $8.21 in close of trade on Friday.

More reading

• 3 ASX retail shares thriving in COVID-19 economic conditions
• 4 ASX shares to profit from booming ecommerce
• Are ASX retail shares buys right now?
• What to look for in the Vicinity Centres FY20 report
• Here’s where Australians are spending – despite the recession

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. 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.

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While the rest of us have been watching earnings season reports, several growth shares have been blazing a trail on the ASX.

Every percentage point of growth now, means a lower return over the medium to long-term. For example, I bought Sezzle Inc (ASX: SZL) at $2.83, today I am up by ~300%. Had I waited even two to three weeks, my return today would be far less. Here’s my pick of 3 ASX growth shares to buy before they rise any further. 

Brainchip Holdings Ltd (ASX: BRN)

BrainChip’s share price has risen by 85.29% in the past month. The artificial intelligence company has had two very major announcements in the past 6 months. First, was the completion of wafer construction for the company’s Akida neuromorphic processor. This is a first-of-its-kind neural technology designed to mimic the processes of the brain and nervous system. Second, was the announcement of the company’s first proof of concept partnership to apply it into the gaming and consumer products sectors.

The company already has a range of commercial products generating revenue. Furthermore, this partnership will be exploring Smart Transportation and Smart City applications. This includes Advanced Driver Assistance Systems (ADAS) and Autonomous Vehicles (AV). We should expect to hear more proof of concept partnerships from BrainChip very soon.

I think this is a great ASX growth share to buy is because I earnestly believe this is a turning point in artificial intelligence.

Jumbo Interactive Ltd (ASX: JIN)

Jumbo Interactive saw its share price rocket up by 21.85% in the past month. The company sells lottery tickets under license from Tabcorp Holdings Limited (ASX: TAH). It is already an established force, and recently extended a distribution deal with Tabcorp 2022 to 2030. Moreover, it is already in negotiations with Lotterywest to sell lottery tickets on its behalf, and recently acquired the Gatherwell UK company. The latter is the UK’s largest external lottery manager for schools and local authorities. 

Lastly, the company has been targeting charity sponsored lotteries. This is a $26 billion industry globally with only 10% of sales online. During the lockdown most countries saw falls in lottery ticket sale, while Australia continued to do well. This is because of the Jumbo online sales channel.

Jumbo is a great share to buy in my view, because it is already undervalued, has a massive addressable market, and is pioneering a one-top platform for all lotteries.

Base Resources Limited (ASX: BSE)

The Base Resources share price has risen by 29.1% over the past month. This overlooked pure-play mineral sands miner operates in Kenya and Madagascar. I think it is a great resources share to buy in a sector where prices are massively inflated.

In its FY20 annual report the company made earnings before interest, taxes, depreciation and amortisation (EBITDA) of $108.7 million. This translated into a net profit after taxes (NPAT) of $39.6 million. However, this was largely due to depreciation and amortisation of $57.2 million. It pays to keep in mind that this is an accounting transaction, and the cash does not leave the company.

Overall, revenues, EBITDA and NPAT were slightly down due to lower ore grades. The company is planning to increase production in FY21, and is moving its Madagascar project closer to operation. Moreover, the company has just announced its maiden dividend payment. On Friday’s closing price this will deliver a yield of 12.5%. The Base resources share price is trading at a price to earnings (P/E) ratio of 6.14.

This is an ASX growth share to buy very quickly to secure the 12.5% dividend payment.

More reading

• Sezzle share price on watch after explosive first half growth
• The Sezzle share price is up a sizzling 52% in August and still going strong
• Where to invest in a ‘rip-roaring’ share market rebound
• 3 ASX shares to turn $10,000 into $100,000
• Why APA, Bravura, Jumbo, & Whitehaven shares are sinking lower

Daryl Mather owns shares of Sezzle Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended Jumbo Interactive Limited and Sezzle Inc. 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.

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All share investors like to think they behave rationally.

But humans are not rational beings, and this is reflected in a phenomenon called the Weekend Effect.

This is the tendency for the market to produce higher returns on a Friday than Mondays, which tend to show lower or negative returns.

An analyst named Frank Cross first described the pattern in 1973 in an article in the Financial Analysts Journal.

There are several theories trying to explain why this would happen.

The simplest is that people, in general, are in a better mood on a Friday than a Monday.

“We find that investors’ decision-making process in the stock market is affected by mood swing across weekdays,” RMIT senior lecturer Angel Zhong. 

“Psychological studies show that people are affected by mood when making decisions and tend to respond to stimuli more positively when in a good mood and vice versa.”

A related theory is that public companies “bury” bad news on a Friday afternoon after the markets close, so there is maximum time for investors to forget about it.

‘Speculative’ shares especially love Fridays

According to Zhong, the effect is more obvious for “speculative” shares as they’re more exposed to emotional buyers and sellers.

“The impact of mood on decision making is pronounced when facing uncertainty. In the context of stock markets, making a decision with highly uncertain information corresponds to the valuation of speculative stocks, which are young, growing and highly volatile.”

She said buy-now-pay-later shares like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) are classic examples in 2020.

“Mood improves gradually from Monday to Friday ranging from the Monday blues to ‘thank god it’s Friday’,” Zhong said.

“That means, investors are more pessimistic on Monday, thus pushing the prices of speculative stocks down. Investors are happier on Friday, hence viewing speculative stocks more favourably.”

Tuesday Blues

Zhong specialises in behavioural biases in retail and institutional share investors.

The Weekend Effect theory originated out of the US, but Zhong has noticed a uniquely Australian phenomenon: the Tuesday Blues.

This is because Australian markets often follow the overnight behaviour of US markets.

US shares experience their Monday depression on Tuesday morning Australian time. Then the ASX follows that lead.

“That means on average, buy-now-pay-later stocks such as Afterpay and Zip tend to underperform on Monday and Tuesday,” said Zhong.

“On Friday, when investors’ mood improves, speculative stocks generate higher returns.”

More reading

• Is the Zip Co share price too expensive to buy?
• Polynovo and 2 more ASX 200 shares to watch this week
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• 3 of the best ASX tech shares to buy in September
• Top brokers name 3 ASX shares to sell next week

Tony Yoo owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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.

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The Zip Co Ltd (ASX: Z1P) share price has leapt up by 47.7% in just the past month, giving it a market capitalisation of $3.47 billion. Consequently, many investors are asking if this share is too expensive to buy. Should shrewd investors expect more growth from this company? Or is it a bubble just waiting to burst?

The stratospheric market cap of buy now, pay later (BNPL) stablemate Afterpay Ltd (ASX: APT) also complicates things. Afterpay has a current valuation of $24.86 billion. A value that bears no resemblance to reality, particularly as it doesn’t make a profit. 

High market capitalisation is a new phenomenon for the ASX. However, in the United States, companies like salesforce.com, inc. (NYSE: CRM) have seen many low earnings per share (EPS) results, including 5 negative results since 2010. Yet it has a market cap of US$244.26 billion. To illustrate further, Salesforce generates approximately a third of the revenues of CSL Limited (ASX: CSL), yet has almost double the market cap.

Why so much interest in the Zip Co share price?

Even though they are not the first in the industry, Zip Co and Afterpay have become the two binary stars of this emerging sector. In addition, the rise of the BNPL sector corresponds with a reduction in credit card accounts. For example, the number of Australian credit card accounts peaked at 16,761,187 in April of 2017. By 29 June 2020, it had fallen to 14,088,998, a 16% reduction. Something the Zip Co annual report informs us is part of a global trend.

Moreover, the BNPL sector has arguably contributed to many companies being able to survive the coronavirus lockdowns. By allowing people to spend beyond their immediate means with no additional cost, it has helped merchants across the nation to maintain and increase sales. 

Having kicked off a booming industry sector in Australia, both companies are now forcing their way into the gigantic markets of the US and Europe. Zip Co presently has an active presence in Australia and New Zealand, the United Kingdom, the US and South Africa. The company’s share price caught the market’s attention after announcing it was buying Quadpay, a US BNPL company. In FY20, Zip Co achieved some impressive results including reaching more than 2.1 million customers and 24,500 partners, record full-year revenue of $161.0 million, and a record transaction volume of $2.1 billion. 

What’s more, the company has secured many lucrative partnerships. These include Amazon.com, Inc. (NASDAQ: AMZN) and deals with Cotton On, Bunnings, and PetBarn. Moreover, the Zip Co share price was set ablaze again recently by the deal with eBay Australia. This is where the differences between Zip and its peers start to become clearer. Zip Co bought a company called SpotCap in 2019. This has morphed into Zip Business, a subsidiary operating in Australia, New Zealand, the UK, the Netherlands, and Spain. Zip Business will provide cashflow finance to small and medium enterprises on eBay, as well as invoice financing and lines of credit.

Foolish takeaway

Zip Co has been one of the primary pioneers of the BNPL sector in Australia. Moreover, global sector domination is clearly in its sights. Personally, I welcome the differences that Zip Co has built into its business model. Specifically, flexible payment timelines instead of four payments, stricter credit assessments and bringing its expertise to the business sector. A mark of the company’s discipline is that bad debts, in the age of coronavirus, are running at only 2.44%.

I think Zip Co is slowly building an alternative finance company of the near future, something we have not seen at this scale before. Accordingly, I believe Zip Co shares are a great investment at the current price. Moreover, I think Australian investors are going to have to start getting used to the high valuations of our global ASX leaders.

More reading

• Why shares go low Mondays and high on Fridays
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• Top brokers name 3 ASX shares to sell next week
• Brokers name 3 ASX shares to buy right now
• Why Appen, Link, LiveTiles, & Zip shares are dropping lower

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends eBay and recommends the following options: long January 2021 $18 calls on eBay, short January 2021 $37 calls on eBay, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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.

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The Nextdc Limited (ASX: NXT) has been a top performing ASX tech share in 2020. However, I think the outlook could be even better than is currently priced in by the market.

What does Nextdc do?

Nextdc is an Australian data centre operator with centres across Australia catering to retail and wholesale customers.

Heightened diplomatic tensions have put the spotlight on data security and sovereignty which has boosted demand for Nextdc’s services.

There is definitely some challenges ahead for the Aussie economy thanks to the onset of the coronavirus pandemic.

However, I think things are looking good for Nextdc’s data centre industry with a focus on remote working and increased cybersecurity.

Why the Nextdc share price can rocket higher

A Research and Markets report from May 2020 estimates the Australian data centre market will reach $6 billion by 2025. That represents a compounded annual growth rate of 3.4% over the next 5 years.

That’s good news for the Nextdc given the Aussie company is already a market leader. I see a few paths to further growth for Nextdc in the next few years.

The most obvious is that Nextdc continues to expand its capabilities across Australia with organic development. This could help the Aussie company capture more market share and increase its value through growth.

Another option is that Nextdc just maintains its market share while the addressable market continues to grow. I think the demand environment is strong particularly as more companies beef up cybersecurity and explore operational flexibility with work from home arrangements.

The final option that I see is inorganic growth through acquisitions. While this might increase Nextdc’s size, I think it would be negative for the Nextdc share price.

Acquisitive companies often pay a premium for taking over the target business. That acquisition is based on perceived “synergies” or operational efficiencies from integrating the new business.

However, historically mergers and acquisitions haven’t been great for the acquirer’s shareholders. That means any new deals to buy smaller competitors could see the Nextdc share price fall lower.

Foolish takeaway

The Nextdc share price has already rocketed 82.1% higher to $11.89 per share. However, if the company can realise further organic growth, I think it could be climbing into the ASX 20 by 2025.

More reading

• How to invest in ASX shares in uncertain times?
• Why I’d buy Afterpay and other ASX tech shares at record highs
• ASX 200 down 0.9%: Costa impresses, Harvey Norman profits grow, Appen downgraded
• 5 things to watch on the ASX 200 on Friday
• NEXTDC share price on watch after hitting the high-end of its guidance in FY 2020

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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The Sezzle Inc (ASX: SZL) share price will be on watch this morning following the release of its half year results.

How did Sezzle perform in the first half of FY 2020?

For the six months ended 30 June 2020, the buy now pay later provider reported underlying merchant sales (UMS) growth of 338% to US$307.4 million.

This led to the Afterpay Ltd (ASX: APT) rival’s total income growing 384% over the prior corresponding period to US$20.8 million.

A key driver of this growth was a significant increase in customer numbers. At the end of the period, the company had 1,475,235 active customers, which was up 243% on the prior corresponding period.

This was supported by the growing adoption of its platform by merchants. Active merchants grew 219% on the prior corresponding period to 16,112 merchants.

Also improving was its loss rates. The company’s net transaction loss came in at 0.7% of UMS (down from 1.5% a year earlier), leading to a net transaction margin of 1.7% (up from negative 0.3% a year ago).

At the end of the half, Sezzle had US$55.7 million of cash and cash equivalents, with total debt of US$38.47 million.

How has Sezzle performed since the end of the half?

Pleasingly, Sezzle’s strong growth has continued since the end of June. In fact, July was a record month for the company.

Active consumers reached 1.6 million (up 7.1% month on month), active merchants rose to 17,600 (9.3% MoM), and UMS climbed to US$71.8 million. The latter represents a record month and 14.6% above the average monthly pace for the second quarter.

Another positive was its repeat usage, with active customer repeat usage improving to 88.1%. This was the 19th straight month of sequential improvement.

Sezzle’s Executive Chairman and CEO, Charlie Youakim, commented: “We are fortunate to be able to provide merchants and consumers the payment flexibility they need in this unprecedented global pandemic of our lifetime. The utility of Sezzle is evident in our record 1H20 performance and strong start to 3Q20 in July.”

Outlook.

Following the strong first half and its positive start to the second, the company has reiterated its guidance for FY 2020.

It expects to achieve an annualised UMS run rate in excess of US$1 billion by the end of 2020.

Looking ahead, the company is testing its offering in India and exploring opportunities in Europe.

Mr Youakim concluded: “Sezzle’s strong recent performance, improving consumer profile and confidence in reaching annualized UMS of US$1 billion by the end of 2020 allows us to be uniquely positioned to further expand through a number of near-term growth initiatives.”

More reading

• 3 under the radar ASX growth shares to buy today
• The Sezzle share price is up a sizzling 52% in August and still going strong
• Where to invest in a ‘rip-roaring’ share market rebound
• 3 ASX shares to turn $10,000 into $100,000
• Flexigroup share price in trade halt ahead of capital raise

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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.

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The Pointsbet Holdings Ltd (ASX: PBH) share price is on fire right now. In fact, shares in the Aussie wagering group rocketed an astonishing 86.7% higher on Friday.

Why did the Pointsbet share price rocket higher?

The major trigger was Pointsbet’s full-year results announcement on Friday morning.

Total revenue for the wagering group rocketed 194% higher to $75.2 million in a breakout year.

Pointsbet reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $6.9 million for its Australian trading arm on the back of strong growth.

The group reported an $82.1 million net win result, up 191% compared to FY19 figures.

It wasn’t just the strong financials that saw the Pointsbet share price surge higher. The Aussie wagering group also announced a new 5-year sports media deal with NBCUniversal in the United States.

That’s another big step into the lucrative US sports betting market which points to more future growth in FY21.

Is it too late to buy?

It’s hard to argue an ASX share is good value after surging 86.7% higher in one day.

The Pointsbet share price has now climbed a whopping 185.7% higher in 2020 and more than 1,000% since the March bear market.

There are certainly some challenges ahead for the Aussie betting company. The coronavirus pandemic has shown that further disruption to sports could lie ahead which isn’t good for online betting volumes.

However, key markets have thus far persevered. Given Pointsbet is still a loss-making company, we can’t even use a price-to-earnings (P/E) ratio to help in valuation.

I would put Pointsbet in the same speculative basket as the Aussie tech shares. Shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) continue to soar in 2020.

I think at this point the fundamental or ‘intrinsic’ valuations have been left behind. However, a record low interest environment and favourable monetary policy bode well for further growth.

I think if sports remain underway in key markets like the US and Australia, then the Pointsbet share price has further to run.

However, if we see further disruptions to 2021 seasons, then the priced-in earnings growth could see a correction for the ASX wagering share.

More reading

• How to invest in ASX shares in uncertain times?
• ASX 200 drops 0.9%, Costa reveals healthy result
• ASX Stock of the Day: Pointsbet share price surges 77% on NBC deal
• Why Costa, Flight Centre, Polynovo, & Pointsbet shares are storming higher
• Pointsbet share price on watch as FY20 revenue triples

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. 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.

The post Is it too late to buy the Pointsbet share price? appeared first on Motley Fool Australia.

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