Why the shares of Afterpay rival Openpay are up 840% since March

The Openpay Group Ltd (ASX:OPY) share price has rocketed a massive 840% higher since hitting a low of 32 cents in late March. Here's why…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Openpay Group Ltd (ASX: OPY) share price has been an incredible performer over the last two and a half months.

Since crashing as low as 32 cents on 23 March, the Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) rival's shares have jumped a whopping 840% to $3.02.

Why is the Openpay share price rocketing higher?

Investors have been buying Openpay and other buy now pay later providers in recent weeks for a number of factors.

One is the belief that the pandemic has accelerated the rapid adoption of the payment method due to retail spending shifting online during the lockdowns.

Both Afterpay and Zip Co have reported stellar sales and customer growth throughout the pandemic. And this has come without any notable deterioration in bad debts. This appears to have convinced the market that their business models are more robust than first believed.

Openpay has also reported strong growth of its own. During the third quarter the company reported a 203% increase in active plans, a 113% lift in active customers, and a 63% jump in active merchants on its platform. This strong form continued in May.

Its active merchants now include the likes of Bunnings Warehouse, Bupa, JD Sports UK, Repco, Smiggle, and Spotlight.

But Openpay's shares won't be building on its strong gains today. This morning the payments company requested a trading halt.

Why are its shares in a trading halt?

It appears as though management has decided to take advantage of its incredible share price gain to raise capital.

No details have been released officially by the company, but the AFR is reporting that Openpay is seeking to raise $30 million to accelerate its expansion in the UK market and strengthen its balance sheet.

According to the report, the company is aiming to raise the funds at $2.40 per share, which represents a 20.5% discount to its last close price.

These certainly are exciting times for Openpay and the buy now pay later space in general.

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 AFTERPAY T FPO and ZIPCOLTD FPO. 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.

More on Share Market News

Broker written in white with a man drawing a yellow underline.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

a hand reaches out with australian banknotes of various denominations fanned out.
Opinions

2 incredible ASX shares I'd buy with $2,000 right now

These investments have global growth potential…

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Opinions

I'd buy this ASX dividend stock in any market

I’m planning to buy plenty more of this ASX stock in the coming months…

Read more »

Person with a handful of Australian dollar notes, symbolising dividends.
Dividend Investing

3 Aussie passive income stocks delivering decades upon decades of dividends

Income-focused investors could benefit from these stocks.

Read more »

rising asx share price represented by rollercoaster ride climbing higher
Broker Notes

2 ASX All Ords shares tipped to rip 20% to 85% in 2026

Here are 2 ASX All Ords shares that the experts predict will grow strongly in the new year.

Read more »

Army man and woman on digital devices.
Broker Notes

Bell Potter names the best ASX defence stocks to buy

Wanting exposure to this booming industry? Bell Potter has two picks for you.

Read more »

A graphic of a pink rocket taking off above an increasing chart.
Opinions

These 2 great ASX shares are bargain buys!

These stocks look really cheap to me and could deliver big returns.

Read more »

A little Asian girl is so excited by the bubbles coming out of her bubble machine.
Broker Notes

Wondering which ASX shares to buy for 2026? Experts weigh in

We reveal 4 ASX shares with buy recommendations from the experts.

Read more »