The Afterpay Touch Group Ltd (ASX: APT) share price has risen 24% since 6 November 2019 after the buy now, pay later business released two pieces of news.
It only needs to rise another 24% to hit $40, so it's not out of the question at all depending what happens over the next few weeks. Afterpay's previous all-time high share price was above $36 a couple of months ago.
The company gave an impressive business update a couple of weeks ago for the four months to October 2019 compared to the four months to October 2018.
Underlying sales were up 110% to $2.7 billion, active customers rose by 137% to 6.1 million and active merchants increased by 96% to 39,450. Current annualised underlying sales are in excess of $8.5 billion and Afterpay added 15,000 new customers per day in October.
Perhaps more importantly, the stats show that purchasing frequency, loss rates and customer lifetime value are improving the longer that customers are on the platform.
For example, customers who joined during FY15 to FY17 are now purchasing on average approximately 22 times a year. Compare that to FY18 and FY19 joiners who are purchasing on average 14 times and seven times per year.
It's this growth of regular customers and custom that will help grow profit margins at Afterpay. An agreement with Mastercard in Australia and New Zealand will support its mid-term growth.
The lodging of the final audit report for AUSTRAC has also given the Afterpay share price a boost. Whilst the external auditor did note there had been historical non-compliance with anti-money laundering and counter-terrorism financing laws, he praised the current setup of Afterpay and that it's now compliant.
Foolish takeaway
Afterpay is delivering excellent growth in Australia, New Zealand, the US and the UK. There are plenty of Afterpay bulls who believe the business on track to be a global star, but I'm not sure it will be as easy as that with more competition from the likes of Zip Co Ltd (ASX: Z1P), as well as higher regulator scrutiny.
The company could easily hit a share price of $40 this year with enough investor sentiment, but it's not for my own portfolio.
