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Can the Afterpay share price climb another 150% in FY21?

The Afterpay Ltd (ASX: APT) share price rocketed 149.96% higher in the last financial year but will the buy now, pay later company’s value continue to climb?

Will the Afterpay share price continue climbing in FY21?

It’s been a huge 12 months for Afterpay and its investors. We’ve seen successful international growth into the United States and United Kingdom markets. The group’s revenues have continued to climb while bad debts have been kept low.

There are a lot of things to like about the Afterpay share price right now. The company’s shares hit a new, all-time high of $63.90 yesterday and Afterpay is now worth a whopping $16.7 billion.

Obviously, any share that has rocketed nearly 150% in 12 months is going to have some question marks about value hanging over it. Incredibly, the company’s shares have gone from a 52-week low of $8.01 to their current $62.24 level in the space of a few months.

Clearly, investors are banking on a lot of Afterpay’s growth to translate into earnings over the coming years. But on top of its strong merchant revenues, there’s also the potential value of Afterpay’s extensive dataset.

The company has a real insight into how consumers spend their money. If this can be monetised in the years to come, it could represent a lucrative future proposition for Afterpay.

While I think the Afterpay share price could continue to climb in FY21, there are some headwinds.

For one, the buy now, pay later space is starting to look a little crowded. Competitors like Openpay Group Ltd (ASX: OPY) and Zip Co Ltd (ASX: Z1P) are also rocketing in value right now.

Now, there is certainly a huge addressable market out there. However, I think a hot market like this one could see more consolidation and an eventual winner in the years to come.

Afterpay is in a strong position if we do see further industry changes given its scale and strong networks. However, the entry of a major international player like Amazon or Visa could spell trouble for Afterpay’s growth plans.

Foolish takeaway

I think the Afterpay share price is incredibly difficult to value right now. There’s a lot riding on the company’s future growth projections, but I think the short-term outlook (and momentum) bode well for a strong finish to the year.

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Ken Hall 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. 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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