It was another busy day of results releases on Thursday. In light of this, a good number of releases no doubt slipped under the radar.

Two that I thought I would bring to the attention of readers today are summarised below. Here’s how they performed in FY 2020:

Atomos Ltd (ASX: AMS)

The Atomos share price climbed 3% on Thursday following its full year results release. It has been a difficult year for the global video technology company because of the pandemic. After delivering a 35% increase in revenue to $32.6 million during the first half, Atomos posted a 60% decline in second half revenue to $11.8 million. This led to FY 2020 revenue of $44.4 million, down 17% year on year. Operating earnings fared even worse during the year. After delivering positive EBITDA of $1 million in the first half, its full year EBITDA was a loss of $7.1 million.

The good news is that it appears as though the worst could be over for the company. Management revealed that July and August revenue was up 50% and 60%, respectively, on the second half run rate of $2 million. It also advised that it expects to return to pre-COVID-19 revenue levels by the start of calendar year 2021, with a more cost-effective operating base.

Slater & Gordon Limited (ASX: SGH)

The Slater & Gordon share price also climbed 3% yesterday following the release of its FY 2020 results. The embattled law firm had a reasonably positive year, reporting an 11.2% increase in revenue to $178.3 million. However, with expenses growing in line with its revenue to $178.5 million, the company posted a loss of $200,000. The increase in costs was primarily reflecting the recognition of the value of the Slater & Gordon Rights Plan, finance costs, an uplift in labour expenses, and depreciation and amortisation.

Nevertheless, management believes its results show continued improvement. Chair, James MacKenzie, said: “The work that we have undertaken to continue to transform the Company is delivering results and we are firmly focused on the future. The Company has a strengthened balance sheet and is seeing positive organic growth. Most importantly we are united in our purpose to deliver affordable, high quality legal services to the thousands of everyday Australians who need our help to access justice.”

More reading

• The Atomos share price has raced 27% so far this week and is still gaining ground
• Atomos share price surges 5% despite 17% revenue slump

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 Atomos Ltd. 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 NEXTDC Ltd (ASX: NXT) share price will be on watch on Friday following the release of its FY 2020 results.

How did NEXTDC perform in FY 2020?

For the year ended 30 June 2020, NEXTDC delivered a 14% or $26 million increase in revenue to $205.2 million. This was at the high end of its guidance range of $200 million to $206 million.

This growth was driven by strong demand for capacity at its data centres. During the 12 months, NEXTDC’s contracted utilisation grew 17.4MW or 33% to 70 MW. This comprises new sales of 17.8MW before adjusting for a one-off clawback of wholesale capacity of 0.4MW.

Interconnections rose 2,079 or 19% to 13,051 during the year, representing 8.1% of recurring revenue.

Also growing at a quick rate was its customer numbers. They increased by 180 or 15% to 1,364 during FY 2020.

This led to NEXTDC reporting underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $104.6 million. This was an increase of $19.5 million or 23% and was at the top end of its guidance range. Operating cash flow was up $14.6 million or 37% to $53.9 million

NEXTDC spent heavily in FY 2020 in order to take advantage of the increasing demand for data centre capacity. Capital expenditure rose $40 million or 11% to $418 million, which was ahead of guidance of $340 million to $380 million. Management notes that its build progress accelerated towards the year end, and the land acquisition for M3 Melbourne was settled for $22 million.

Nevertheless, the company finished the year with a very strong balance sheet. At 30 June 2020, NEXTDC’s cash and undrawn debt facilities stood at $1,193 million. This was supported by capital raisings totalling $862 million during the 12 months.

NEXTDC Chief Executive Officer and Managing Director, Craig Scroggie, commented: “Today’s results are a testament to the Company’s pursuit of excellence to provide the industry’s highest standard of data centre services. Whilst everyone is adjusting to the new normal presented by the COVID-19 global pandemic, it is pleasing that NEXTDC has been able to continue delivering on market expectations, with its FY20 result coming in at the top-end of earnings guidance provided at the start of the financial year.”

FY 2021 guidance.

NEXTDC has provided guidance for FY 2021 and expects more strong growth.

Based on current billing, contracted utilisation levels, and expected new customer contracts, NEXTDC expects data centre services revenue in the range of $242 million to $250 million. The high end will be a 24.5% increase year on year.

It expects its underlying EBITDA to be in the range of $125 million to $130 million. This also implies growth of approximately 24.5% at the high end.

Finally, the company will be spending big again in FY 2021 and has forecast capital expenditure in the range of $380 million to $400 million.

More reading

• These ASX 200 shares could help you grow your wealth
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• 2 of the best ETFs for investing in ASX shares
• 3 ASX growth shares to buy in September
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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. 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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Netflix (NASDAQ: NFLX) has seen record-setting viewer growth since the onset of the coronavirus pandemic. The streaming giant added an unprecedented 25.86 million subscribers in the first six months of 2020, nearly as many as it added in all of 2019. This left many wondering if the newly added customers would remain once the pandemic has passed. A recent analyst survey indicates that most Netflix subscribers plan to stick around.

The news drove Netflix shares to all-time highs, and the stock was up more than 11% as of this writing.

Piper Sandler analyst Yung Kim conducted a survey that sought to answer the question. The responses on the questionnaire suggest that not only will Netflix keep the vast majority of its viewers post-pandemic, but customers also seem ready to pay more for the service. 

The analyst asked 1,000 respondents, “What video services will you use after stay-at-home rules ease?” Netflix led the pack with 41% choosing it. The streaming leader was followed by Amazon‘s (NASDAQ: AMZN) Prime Video at 28%, while cable TV made a showing with 19% of respondents. Newer additions to the streaming fray also made an appearance, as Disney‘s (NYSE: DIS) Disney+ was named by 17%, and AT&T‘s (NYSE: T) HBO Max garnered 7%.

The analyst conducted a separate survey of 600 people and found that the majority of Netflix subscribers think the service is a good value and would even stick around if the company were to raises prices. While acknowledging that he doesn’t expect a price increase this year, Kim said that subscribers would be willing to pay about $2.20 more per month, down from $2.40 in a similar survey in February. He pointed out that a higher percentage of subscribers are now willing accept a price increase, causing a dip in the amount of the acceptable increase.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Danny Vena owns shares of Amazon, Netflix, and Walt Disney and has the following options: long January 2021 $85 calls on Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Netflix, and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short October 2020 $125 calls on Walt Disney. The Motley Fool Australia has recommended Amazon, Netflix, and Walt Disney. 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 Marley Spoon AG (ASX: MMM) share price is on watch following the release of the company’s half-year results after the market close on Thursday. 

The company is a leading global subscription-based meal kit provider.

Half-year results

The coronavirus pandemic has accelerated the adoption of online grocery shopping and the growth of Marley Spoon’s business. As a result, it has upgraded its 2020 full-year guidance for revenue growth to be in the 80% to 100% range compared to the prior corresponding period (pcp). 

1H20 revenue grew 89% to 116.2 million euros compared to the pcp. Additionally, Marley Spoon’s contribution margin is at a record 30%, up 6 percentage points year-on-year (YoY). Slower increases in marketing, general and administrative expenses has led to increased earnings. 

Q2 revenue grew 129% to 73.3 million euros compared to the pcp.

Marley Spoon’s net loss was 67.5 million euros in the first half, primarily due to a non-cash fair market value adjustment on derivatives related to convertible bonds and warrants. 

Pleasingly, Marley Spoon turned cash flow positive in 1H20 to over 8 million euros. Its cash balance has increased by 13 million to 18 million euros. 

It delivered positive operating earnings before interest, taxation, depreciation and amortisation (EBITDA) in Q2, but an overall loss of 2 million euros in 1H20.

Favourable market

CEO Fabian Siegel said:

Since we last reported to the market at the end of July, the impact of the COVID-19 pandemic continues to create a favourable environment for us. We still see an accelerated adoption of online shopping for all kinds of goods, including groceries.

The company was preparing for a sizeable drop in quarter on quarter revenue for Q3, due to uncertain economic conditions, but this didn’t materialise. Marley Spoon is experiencing significantly reduced customer acquisition costs and strong demand in all regions. 

The temporary closure of its Melbourne facility due to infected team members did not materially impact the business or customers. It has since re-opened the Melbourne manufacturing site. 

Outlook

Marley Spoon continues to see strong momentum in customer acquisition and better than usual unit economics, driven by a high level of retention and significantly lower customer acquisition cost. The company intends to take advantage of this trend and invest in customer acquisition where targets are being met or exceeded.

The company will continue reinvesting profits back into business while improving its cash position and balance through lowering debt and increasing equity through conversion of convertible bonds. 

The Marley Spoon share price was trading at $3.40 per share at market close on Thursday night, down 2.86%.

More reading

• On a day when the ASX 200 is going nowhere, these popular “coronavirus shares” are hitting record highs
• If you invested $8,500 in this ASX share 6 months ago, you’d have $100,000 now
• Even after the meteoric rise in the Marley Spoon share price, here’s why it remains a core holding for one leading fund manager
• 3 ASX small cap shares with serious growth potential
• Can the Bubs share price go higher in 2020?

Motley Fool contributor Matthew Donald 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Facebook (NASDAQ: FB) jumped 8.2% to a new closing high of $303.91 on Wednesday, after analysts helped to focus investors’ attention on the digital ad titan’s massive growth opportunity in e-commerce. 

So what 

On Tuesday, UBS analyst Eric Sheridan reiterated his buy rating on Facebook’s stock and boosted his price forecast from $242 to $330. Even after today’s move, Sheridan’s new target price represents potential gains for investors of roughly 9%.

Sheridan believes Facebook’s recent push into e-commerce will be a significant source of additional growth for the social media leader. In May, Facebook partnered with Shopify and other e-commerce companies to launch Facebook Shops, a new online shopping platform. And yesterday, BigCommerce said it’s teaming up with Facebook to launch a new feature on Instagram that would allow users to purchase products without leaving the popular photo-sharing app. In turn, Sheridan expects Facebook to become a powerful force in social commerce.

Now what

Facebook is already benefiting from the rise of e-commerce, as many online retailers spend heavily to promote their wares on its social media networks. But Facebook is taking steps to make it easier to make purchases directly from its social media sites, and, in the process, claim a larger share of the online retail industry’s profits.

Judging by the stock’s recent gains, investors applaud Facebook’s e-commerce initiatives.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Warren Buffett would applaud the share price gains of these undervalued ASX shares
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• Meet the ASX stocks that are about to get a boost from Facebook and Google

 Joe Tenebruso has no position in any of the stocks mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook and Shopify. The Motley Fool Australia has recommended Facebook. 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 S&P/ASX 200 Index (ASX: XJO) rose by 0.16% today to 6,126 points.

It was another busy day of reporting today with plenty of good growth numbers.

Afterpay Ltd (ASX: APT)

Buy now, pay later (BNPL) business Afterpay released its FY20 result today.

Total underlying sales grew by 112% to $11.1 billion. Afterpay said it has an annual run rate of over $15 billion per annum, based on FY20 fourth quarter trading. Active customers increased by 116% to 9.9 million and active merchants went up 72% to 55,400.

The gross loss as a percentage of underlying sales improved from 1.1% last year to 0.9% in FY20 for the ASX 200 business.

Total income increased by 97% to $519.2 million. The net transaction margin grew by 110% to $250.2 million. The net transaction margin stayed steady at 2.3%.

Afterpay’s earnings before interest, tax, depreciation and amortisation (EBITDA) excluding significant items rose by 73% to $44.4 million.

During FY20, Afterpay added 17,300 new customers per day. In the last quarter of FY20 it added 20,500 new customers per day.

Pleasingly, customers continue to transact more frequently the longer they stay on the ASX 200 share’s platform. International markets are following a similar customer frequency trajectory like the ANZ business.

Afterpay launched into Canada in August to extend its North American business. It recently announced the acquisition of European-based Pagantis. It is also planning to expand into Asia after the acquisition of a small Singapore business operating in Indonesia called EmpatKali.

Bega Cheese Ltd (ASX: BGA)

The best performer in the ASX 200 today was Bega Cheese.

Bega management said that the FY20 result demonstrated the value of a consistent strategy and the capacity to manage unpredictability across the supply chain.

The statutory results were quite impressive with revenue growth of 5% to almost $1.5 billion. EBITDA grew by 11% to $87.8 million, EBIT went up 48% to $42 million and profit after tax (PAT) grew by 384% to $21.3 million.

However, when expenses relating to legal costs, IT systems and Koroit were excluded, the normalised result didn’t look as impressive.

The ASX 200 business said normalised EBITDA fell 2% to $103 million, normalised EBIT dropped 11% to $57.2 million and normalised PAT rose 3% to $31.9 million. Normalised earnings per share (EPS) was the same as last year at 14.9 cents.

The Bega board declared a final dividend of 5 cents per share.

In FY21 Bega said it’s well placed for growth and seasonal conditions in dairy are “much improved” compared to recent years with industry supply expected to increase in FY21.

Appen Ltd (ASX: APX)

The worst performer in the ASX 200 was Appen after releasing its FY20 half-year result. The Appen share price fell by 11% today.

Appen reported that total revenue rose by 16% to $306.2 million. Relevance revenue rose 34% to $273.9 million and speech and imagine revenue dropped 20% to $31.9 million.

Underlying EBITDA dropped 2% to $49.1 million. However, statutory EBITDA increased by 34% to $50.9 million.

Underlying net profit fell by 12% to $28.9 million and statutory net profit rose 8% to $22.3 million.

Appen said that revenue growth and customer acquisition in China has been “especially pleasing” as well as new customer wins in the first half in the US and Europe.

The ASX 200 tech share said that the pandemic has had a negligible impact on the first half result. A slowdown in new business development and deferred renewals by smaller customers amounted to low single digit percentage points of revenue. The global slowdown in online advertising spend brought about by the pandemic will have a small impact on Appen’s ad-related revenue in the second half.

The company said it’s expecting full year underlying EBITDA to be in the range of $125 million to $130 million. The full year underlying EBITDA margin is expected to be in the high teen percentage.

More reading

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• Is it finally time for ASX investors to buy gold?
• Where to invest in a ‘rip-roaring’ share market rebound

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen 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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Domino’s Pizza Enterprises Ltd. (ASX: DMP) shares gained 3.2% in today’s trading, bringing the total gains for the Domino’s share price to 17% in August.

As one of Australia’s top 200 listed shares, Domino’s makes up part of the S&P/ASX 200 Index (ASX: XJO). In contrast, the ASX 200 has gained 3.8% so far in August.

Despite being well-positioned in the takeout and food delivery market, Domino’s shareholders weren’t spared the pain during the wider COVID-19 share market selloff earlier this year. The Domino’s share price tumbled 31% from 20 February through to 19 March.

Since then Domino’s shares have been on a tear, up 94% from the March low. Year-to-date, the Domino’s share price is up 61%, while the ASX 200 is still down 8%.

What does Domino’s do?

Australian-owned Domino’s Pizza Enterprises Limited is Domino’s largest franchisee outside of the United States. The business predominantly makes pizzas with a focus on takeout and delivery services.

The company holds franchise rights to the Domino’s brand in Australia, New Zealand, Belgium, France, The Netherlands, Japan, Germany, Luxembourg and Denmark, with more than 2,500 stores.

Domino’s shares began trading on the ASX in 2005.

Why is the Domino’s share price up 17% this month?

With the exception of this year’s viral selloff, the Domino’s share price has remained in a solid uptrend since July 2019.

It got a big boost following the release of its FY20 results on 19 August.

The company reported online sales growth of 21.4% and a 6.5% growth in the number of its franchisees. Same store sales growth came in at 5.8%, in line with the company’s guidance. It also announced a huge uptick in free cash flow, which grew 90.6% to $161.8 million.

Domino’s is well positioned with its takeout and delivery business model in these days of social distancing and rolling lockdowns. The company has also been quick to embrace new technologies, including AI-enabled voice assistants, app ordering and even drone delivery.

Domino’s potential to deliver share price growth was clear to the Motley Fool’s own Scott Phillips well before the coronavirus was forcing people to stay at home. Scott recommended Domino’s in his Share Advisor service on 26 April 2018. Members who followed Scott’s advice and held onto their shares have seen the Domino’s share price gain 101% since then.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited. 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 Experience Co Ltd (ASX: EXP) share price soared 15.38% higher today as the company announced better than expected full year results. Experience’s share price was trading at 15 cents at close of trade.

Experience provides adventure tourism and leisure activities in key tourist destinations in Australia and New Zealand. Some of these experiences include tandem skydiving, Great Barrier Reef snorkeling, helicopter and diving tours and hot air ballooning.

Experience’s FY 2020 challenges

The Experience share price has been battered this year as it suffered from the impacts of Australia’s bushfires and the COVID-19 pandemic.

CEO John O’Sullivan said 2020 had presented “the most challenging conditions” in the company’s 20-year history.

“The Australian tourism industry was already on the back foot from the Australian bushfires, however it was brought to an immediate halt upon the emergence of COVID-19,” he said.

So how did the company perform in FY 2020

Experience generated $87.4 million from continuing operations. This was a 32.8% decline on the previous year, largely driven by COVID-19 and the bushfires. Underlying EBITDA fell even more drastically to $7.3 million – a 70% decrease. This included a second half loss of $1.8 million with allowance of bad debts.

The company posted a loss of $39.7 million for the year, falling from a $5.4 million profit the year before. As international customers make up 65% of Australian and 92% of the company’s New Zealand operations, it is not hard to see the impact of coronavirus-related travel restrictions on business operations.

With tourism not expected to return to pre-pandemic levels until after FY24, net debt is an important consideration as companies struggle to pay off large debts. Experience share holders will be happy that its net debt of $9.0 million has declined as a result of divestment in non-core assets. This has delivered approximately $22 million.

The Experience share price rocketed today, with most of the bad news likely to be already priced in. Cost-saving programs and rapid response to the pandemic have also mitigated the impact of such extreme adverse conditions.

Outlook for the Experience share price

Heading into FY21, Experience enters the recovery phase. Trading conditions will depend on pandemic developments and restrictions on domestic and international borders. Profitability is understandably one of the company’s foremost concerns and as such it has implemented stringent cost-saving controls.

The Experience share price is on the rise as operations restart across the portfolio. Skydive locations have opened in all locations except for Victoria and Glenorchy (NZ). Furthermore, July trading has been encouraging, with underlying EBITDA breakeven for the first time since the return of operations. However, this is aided by the support provided by Jobkeeper and landlords.

More reading

• Marley Spoon share price on watch after upgrading revenue guidance
• Why Facebook stock surged to a new all-time high on Wednesday
• ASX 200 rises 0.2%, Afterpay reports FY20 result
• Domino’s share price gain of 17% in August a good slice of news for shareholders
• Tesla stock split: Should you buy now or wait?

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of EXPERNCECO 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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Shares of Tesla (NASDAQ: TSLA) will soon start trading on a split-adjusted basis, making the stock more accessible to investors who weren’t willing to shell out around $2,000 for a single share. On Monday, the electric-car maker’s shares will begin trading on a 5-for-1 basis. 

With a stock split just days away, many investors are likely interested in buying shares of the electric-car maker. More importantly, some investors may be wondering whether it makes more sense to buy the growth stock before or after Tesla stock starts trading on a split-adjusted basis.

Is the stock more likely to go up or down after shares split?

Stay focused on the business — not the upcoming stock split

Based on the way Tesla stock has traded since its stock split announcement earlier this month, investors may be tempted to think that buying the stock ahead of its split on Monday makes the most sense. After all, shares have already risen 35% since the stock split was announced on Aug. 11. 

But the reality is that it’s impossible to know how Tesla shares will trade leading up to (or after) the upcoming stock split. Sure, recent exuberance in the market for Tesla shares has likely been driven, in part, by excitement about the upcoming stock split. But there is no rational reason for investors to bet on a stock simply because of a stock split, as a stock split does nothing to make Tesla shares more valuable.

All that will happen in Tesla’s stock split is a fivefold increase in total share count. Each share, however, will represent one-fifth of the ownership in the electric-car maker that it did previously. Put another way, shareholders will have five times the shares in their account after the split but the total value of those shares will equal their combined pre-split value.

Don’t speculate

With all this in mind, investors should base any investment decision on their long-term expectations for Tesla’s underlying business and the stock’s current valuation relative to those views. Therefore, if you believe the stock is worth more than its $393 billion market capitalization at the time of this writing, consider buying the shares based on that belief. But don’t buy shares based on a speculative bet on how the stock will trade leading up to or following the stock split.

Of course, some investors may be convinced that there will be a bump in demand for Tesla shares when they become more affordable after their split. Keep in mind, however, that the market is forward-looking; if you’re predicting this will be the case, you’re likely not the only one thinking this. The Street may have already priced in an expected boost to demand by bidding up shares, and some investors may be standing by ready to sell if the stock becomes overvalued based on their estimate of its underlying business value.

It’s simply impossible to know how Tesla shares will trade in the coming days. If you are interested in buying Tesla stock, do so based on your long-term view for the automaker’s business potential.

Is Tesla stock a buy?

Nevertheless, investors are likely still wondering: Is Tesla stock a good buy at this level?

After soaring 900% over the past 12 months, the automaker’s valuation is becoming increasingly difficult to justify. Despite boasting a market capitalization that is closing in on $400 billion, the automaker’s trailing-12-month free cash flow is less than $1 billion. Furthermore, while Tesla’s vehicle deliveries are growing quickly and are likely to continue rising, the automaker is only expected to deliver 500,000 vehicles this year. Compare that to the approximately 2.5 million vehicles BMW sells annually, despite BMW’s market cap being less than $40 billion.

While Tesla’s execution recently has been impressive, from last year’s rapid factory construction launch in China to an earlier-than-expected Model Y launch this year, investors should consider the stock’s wild valuation carefully before buying shares.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Tesla Gigafactory 1 to boost battery production capacity 10% after new $100 million panasonic investment

Daniel Sparks 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 Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends BMW. 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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Afterpay Ltd (ASX: APT) showed off a statistic on Thursday it claims sets it apart from its rivals.

The buy now, pay later (BNPL) provider displayed the evidence in its results presentation, where it announced a 112% boost in sales to hit $11.1 billion.

The table shows Afterpay only receives 14% of its revenue from customer fees, compared to more than 60% for its BNPL rivals and 80% for credit cards.

Provider	Income from customer fees	Income from merchant fees
Afterpay	14%	86%
BNPL US competitor 1	67%	33%
BNPL US competitor 2	67%	33%
BNPL Australia competitor	63%	37%
Credit cards	80%	20%
Source: Afterpay. Table created by author.

Afterpay chief executive Anthony Eisen said this differentiates the service from both old world and new world competitors.

“We don’t need customers to lose for us to win,” he said.

“We don’t rely on customers to go into revolving debt to make money.”

Eisen said this has been the philosophy throughout the company’s 5-year existence.

“We don’t charge interest. We cap late fees. We still, as we have from day one, suspend accounts when a single payment is missed. The idea is you use Afterpay to own something – you don’t use it to rent something.”

The average order is worth $153, which Afterpay considers a low amount, and the average outstanding balance is just $190.

“We only let customers spend more if they demonstrate good behaviour.”

The moat keeps rivals and regulators away

Of course, it is in Afterpay’s interests to continue to push the line that it is not a credit provider.

The company is still co-operating with the Australian Securities and Investments Commission and AUSTRAC in their enquiries into the BNPL sector.

Its business model would be substantially impacted if authorities decided Afterpay and its rivals required the same level of regulation as traditional credit.

Eisen said its BNPL competitors largely had the same motivations as old credit card providers.

“When you look at traditional credit models, they make more money when consumers spend beyond their means or when they miss payments.”

Afterpay claims that on home loan applications, spending on its platform is counted as an expense. This is compared to a credit card, which results in a loss in borrowing power for the applicant.

Afterpay’s share price dipped Thursday morning after the release of its financial results. It has since recovered to be 0.85% up at 3.38 pm AEST, to trade at $91.49.

More reading

• Is the Afterpay share price heading to $200, or is this the ASX’s biggest bubble?
• What Prospa’s share price reaction and profit results mean for ASX banks
• Where to invest in a ‘rip-roaring’ share market rebound
• ASX 200 jumps 0.7%: Afterpay reaches 9.9 million customers, Woolworths strong sales growth
• Afterpay share price in focus after stellar FY 2020 result

Motley Fool contributor Tony Yoo owns shares of AFTERPAY T 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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