The Afterpay Ltd (ASX: APT) share price is having another one of those days, hitting a new record all-time high.
Afterpay shares closed at $100.98 last week, and opened this morning at $101.01. But soon afterwards, Afterpay stepped on the gas, climbing as high as $106.39 a share. The share price has cooled a little since, but is still trading at $106.29 at the time of writing, up 5.23% for the day.
At this share price, Afterpay now commands a market capitalisation of ~$30.3 billion, incidentally more than Coles Group Ltd (ASX: COL) at $24.3 billion today.
But Afterpay shareholders would be used to this by now — 2020 has brought so many 'new all-time highs' that it's becoming a little 'ho-hum'. It seems ridiculous now, but Afterpay actually started 2020 at the now-modest share price of $30.41.
March famously saw this company dip as low as $8.01 a share. With the coronavirus-induced recession looming, investors who had previously 'drunk the Kool-Aid' on Afterpay were suddenly worried that a company that had never lived through a recession would be facing a wave of defaults.
However, those fears were quickly forgotten. The Afterpay share price rose more than 250% off of these lows between 23 March and 14 April. Today, the shares are up more than 1,200% since 23 March, and 244% year to date.
So what's the latest with this buy now, pay later (BNPL) pioneer?
Image source: Getty Images
The latest from Afterpay
Everything just seems to have gone Afterpay's way in 2020. Far from provoking a wave of defaults on Afterpay purchases, the coronavirus pandemic has seen more people than ever embrace BNPL. The coronavirus-induced abandonment of physical cash due to hygiene concerns hasn't hurt either.
In May, Afterpay announced that the Chinese e-commerce giant Tencent Holdings had taken a 5% stake in the company (which would have already paid off handsomely for Tencent). Not only was this a vote of confidence on Afterpay, but the company also waxed lyrical about the expansionary potential this deal brought to the table. Here's some of what Afterpay's co-founders said at the time:
Tencent's investment provides us with the opportunity to learn from one of the world's most successful digital platform businesses. To be able to tap into Tencent's vast experience and network is valuable, as is the potential to collaborate in areas such as technology, geographic expansion and future payment options on the Afterpay platform.
Afterpay's numbers don't lie
Back in August, Afterpay reported its earnings from the 2020 financial year (the 12 months ending 30 June). The company reported that underlying sales increased by 112% over the period to $11.1 billion (with a b). Of that $11.1 billion, $4 billion came from the United States, a lucrative key growth market for the company. That was up 330% over 2019's numbers.
This all helped Afterpay to post a 73% rise in earnings before interest, tax, depreciation and amortisation (EBITDA) to $44.4 million.
But it's not just the money coming in the door that's exciting investors. Afterpay's customer base is also growing at breakneck speed. Over the same period, Afterpay reported a 116% rise in active customers around the world to 9.9 million. Of that number, 5.6 million were Americans, a 219% increase.
After stellar entrances to the US, United Kingdom, and European markets, Afterpay is now focusing on expanding into Canada, Singapore and Indonesia, amongst other countries.
Banks and indexes
In addition, Afterpay announced a partnership with the major ASX bank Westpac Banking Corp (ASX: WBC) back in October. The partnership will result in Afterpay offering Westpac-backed transaction and savings accounts and other banking tools to its Australian customers through its platform. This offering is set to be rolled out soon.
Finally, Afterpay shares are likely benefitting from the company's recently announced inclusion into some major indexes. As my Fool colleague James Mickleboro covered today, Afterpay is set to join both the ASX 50 and the ASX 20 come 21 December. Any index or fund manager that covers these indexes will have to add Afterpay accordingly. This kind of institutional money can mean significant buying pressure for Afterpay shares.
All of these factors have aligned in 2020, resulting in massive momentum for the Afterpay share price.
