One of the standout performers on the S&P/ASX 200 index this year has been the Afterpay Touch Group Ltd (ASX: APT) share price.
Since the start of the year the payments company's shares have rallied an incredible 185% higher.
This makes it the third-best performer on the benchmark index behind only medical device company Polynovo Ltd (ASX: PNV) and online lottery ticket seller Jumbo Interactive Ltd (ASX: JIN).
Why has the Afterpay share price almost tripled in value this year?
There have been a number of catalysts for the company's impressive share price performance this year.
One is its stronger than expected growth in FY 2019. Over the 12 months the company reported a 140% lift in underlying sales to $5.2 billion and a 93% jump in its net transaction margin to $136.5 million.
This smashed even the market's most bullish estimates and was driven by a combination of increasing usage by existing customers and a significant rise in new customers. At the end of the period the company's active customers had lifted by 130% to 4.6 million.
Also getting investors excited was its performance both in the United States and the United Kingdom.
Growth in the United States has continued to be explosive, leading to a significant jump in its underlying sales. Underlying sales in the world's largest retail market reached almost $1 billion in FY 2019 and had a run-rate in excess of $1.7 billion in late August.
Whereas in the UK, after just 15 weeks of operation in the region, the company had over 200,000 customers on-boarded. This is even higher than the US at the same time post-launch, which appears to demonstrate that the UK is embracing its platform.
A final positive which caught the eye of investors was its announcement of a deal with payments giant Visa. There had been concerns that VISA was going to disrupt Afterpay with its own launch into the buy now pay later market, but this looks unlikely now after the two parties entered into agreements which will form the basis of a strategic partnership to support the development of innovative new solutions and business growth in the US market.
Should you invest?
Whilst its shares are certainly expensive in conventional terms, I continue to see value in them if you're planning to make a long-term investment. This is due to its massive global market opportunity and my belief that it is well-placed to dominate the industry thanks to its strong brand and growing customer and merchant numbers.
Overall, I would class it as a buy along with fellow tech stars Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).
