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The Afterpay share price has zoomed 11% higher ahead of its update

One of the best performers on the S&P/ASX 200 Index (ASX: XJO) on Thursday has been the Afterpay Ltd (ASX: APT) share price.

In afternoon trade the payments company’s shares are up an impressive 11% to $22.05.

Why is the Afterpay share price racing higher today?

Investors have been buying the company’s shares ahead of the release of its quarterly business update next week.

On Wednesday the buy now pay later provider revealed that it will release its third quarter update on the morning of Tuesday April 14. Given the long weekend for Easter, this means that today was the last day you could buy shares before that update is released.

Will it be a good update?

Judging by the buying frenzy today, many investors appear to be expecting another strong update from Afterpay. Which isn’t too hard to believe given its long track record of smashing expectations with its updates.

Though, it is worth remembering that a lot has changed over the last three months due to the coronavirus pandemic.

Not that you would have noticed if you had been looking at updates from rivals such as Sezzle Inc (ASX: SZL) and Zip Co Ltd (ASX: Z1P).

Sezzle’s growth.

Earlier this week, Sezzle reported a 13.6% quarterly increase in underlying merchant sales to US$119.4 million for the March quarter. Year on year, underlying merchant sales have now grown by a massive 321%.

This was driven by a 25.6% quarter on quarter increase in active customers to 1,149,245 and a 27% lift in active merchants to 12,715.

In addition to this, merchant fees were up by 17.5% quarter on quarter to US$6.8 million and repeat usage by customers improved to 85.6%.

Zip Co breaks records.

It was a similar story for Zip Co. Earlier this week it reported quarterly revenue of $45 million, up 96% year on year.

This was driven by a 67% increase in customer numbers to 1.95 million and an 84% jump in quarterly transaction volumes to $518.7 million. Also supporting its growth was its merchant additions. During the March quarter Zip Co added 1,900 merchants, bringing its total to 22,744.

Based on these numbers, it is clear that the buy now pay later option continues to grow in popularity with consumers. As a result, I suspect Afterpay could have had another impressive quarter. The big question, though, will be what will its outlook be?

I’m optimistic the closure of bricks and mortar retail stores will lead to more online shopping funnelling through its platform. But that is of course if consumers are still spending during the pandemic.

All will be revealed on Tuesday.

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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. 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.