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Afterpay shares have exploded 142% in FY20

As the end of the current financial year (FY20) approaches, we Fools have been looking back on which ASX shares have been the best winners and losers over the financial year.

As the last 12 months has fully incorporated the coronavirus outbreak, there have certainly been more than a few losers. But today, it appears there is one ASX share with an insurmountable led to take the crown of the best share in the S&P/ASX 200 Index (ASX: XJO).

And that share is, of course, Afterpay Ltd (ASX: APT).

How have Afterpay shares performed in FY20?

Quite well, really – Afterpay shares are on top of the ASX 200 returns pile for FY20.

Since 1 July 2019, the Afterpay share price has gone from $24.40 to today’s share price of $59.14 (at the time of wiring). That’s a 12-month return of 142.4%. For comparisons’ sake, the ASX 200 Index has returned -11.3% over the same period.

Not that it’s been smooth sailing for Afterparty in FY20. Over the course of the last 12 months, Afterpay has commanded as little as $8.01 a share (on 23 March) and as much as $62.33 (just this month), as you can see on the chart below:

Afterpay Ltd 1-year price chart and data | Source: fool.com.au

Anyone who was lucky enough to buy at the low and sell at the high would be sitting comfortably on a 678% gain.

Even so, a flat 142% return for 12 months isn’t bad at all.

Afterpay shares on the move

Afterpay shares have certainly had a wild ride. Investors heavily sold-off the buy now, pay later (BNPL) pioneer in March as fears over a credit crunch, and a potential wave of defaults on users’ debt grew, pushing Afterpay below $9 a share. But in the months since the March crash, the Afterpay share price has soared, including by around 20% in just the past month to new all-time highs. Far from dropping off, the company revealed the use of its platform actually grew during the worst throes of the coronavirus pandemic.

It has also subsequently revealed that its new UK-based Clearpay service is growing at unprecedented rates. More than a million Britons are using now actively Clearpay, despite it only being active in the country for around a year. US growth is also continuing at a healthy pace and the company has also sown up a potentially lucrative deal with Apple as well as a partnership with Chinese tech giant Tencent Holdings.

While we still have a few hours of trading left in the financial year,  it doesn’t look like any other ASX company is close to knocking Afterpay off as FY20’s ASX 200 winner. Its closest competitor appears to be Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), which is sitting on a 115% gain for the year at the time of writing. Unless something dramatic happens later today, it looks as though the race is run.

Should we buy Afterpay for FY21?

I have been wrong on Afterpay many times in my investing career, and it has certainly cost me a lot of foregone returns, so take this prediction with a slab of salt. But I don’t see Afterpay generating anywhere near the returns it has for shareholders over the last financial year in FY21.

This company has had an eye-popping run and sure, it is growing like its nobody’s business. But much of this growth has been baked into the share price we see today. Unless Afterpay manages to pump the throttle even harder on its customer numbers and platform growth and pull another couple of rabbits out of its hat, I don’t see this share giving investors another double-up return in FY21. I could be wrong again, but we shall have to wait and see.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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.

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