Join our daily newsletter At The Bell to receive exclusive market insights
- Afterpay (APT) shareholders are one of the few winners to emerge from the COVID-19 pandemic
- This is because the buy now, pay later service’s share price has shot up since mid-March
- The company’s share price hit a low of $8.90 during that month, before climbing to a high of $75.05 in July
- Afterpay now has a market cap of $19.8 billion and has set its sights on further global expansion
- Shares in the company are currently trading for $71.39 each
Leading buy now, pay later service Afterpay (APT) has emerged as one of the few winners from the coronavirus pandemic, as its share price goes from strength to strength.
COVID-19 growth
Since March 23, when Afterpay’s share price bottomed out at $8.90 per share, the stock has absolutely soared, hitting a high of $75.05 on July 21.
Source: Hot Copper
While similar company’s Openpay Group (OPY), Zip Co (Z1P) and Flexigroup (FXL) — who all offer buy now, pay later services — saw similar rises in their stock prices from late March through to July, none of them hit the same heights as Afterpay.
The company has attributed its recent success to the shift to online-shopping, prompted by COVID-19 lockdowns, as well as a greater focus among consumers on budgeting.
In a recent financial update, Afterpay said the June quarter reflected its best-ever sales results, due to “the accelerating shift to e-commerce spending since the impacts of COVID-19 emerged globally”.
The company recorded $3.8 billion dollars worth of underlying sales in the fourth quarter of 2020, an increase of 127 per cent when compared to the same period last year.
Meanwhile, the U.S. had the best growth out of all of the territories Afterpay is available in, with sales increasing by 299 per cent in Q4, compared to the same period in FY19.
Is it sustainable?
Afterpay’s recent growth is undeniable, however, many investors may be questioning whether the growth is sustainable going forward.
The company is focused on growing its service globally, recently announcing an $800 million capital raise, with $650 million already successfully raised this week.
Afterpay is already operating in Australia, New Zealand, the U.S. and the U.K, with 9.9 million customers across those regions. But it’ll use some of the funds from its recent equity raise to launch into the Canadian market, with the move expected to occur in the first quarter of FY21.
The money will also be used to expand its existing customer base by rolling out in-store payment options, which the company has essentially done with its new agreement with Apple and Google.
Under the deal, which was announced in July, Afterpay will be available to use online and in-store via the two tech giants mobile wallets, Google Pay and Apple Pay.
It’s a strong sign that Afterpay could remain the leader in the buy now, pay later market.
Shares in Afterpay are currently trading up 0.4 per cent, at $71.03 per share at 2.12 pm AEST.
