Why the Afterpay (ASX:APT) share price just smashed its record high

The Afterpay share price just cracked another record, reaching $120. We take a closer look as to what's behind its incredible run.

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The Afterpay Ltd (ASX: APT) share price has reached the magic $120 mark today as it continues to break records. Shares of the buy now, pay later (BNPL) giant reached as high as $120.77 intraday trade, but have since retreated to $120.31, up 4.98% at the time of writing.

It has been an incredible week for the Afterpay share price, which is up 25% in just the last 5 days. Its recent performance means shares in the company have now climbed an astounding 315% since this time last year.

What has been driving the Afterpay share price?

Afterpay needs no introduction, despite only joining the S&P/ASX 200 Index (ASX: XJO) 2 years ago. Its shares have been rising ever since.

Recently Afterpay became part of an exclusive club, storming into the S&P/ASX 20 Index (ASX: XTL). The shakeup comes on the back of disruption caused by COVID-19, evidenced by the fact that a growth share is replacing the blue-chip Insurance Australia Group (ASX: IAG) on the index.

Furthermore, the news also means the ASX juggernaut will be joining the S&P/ASX 50 Index (ASX: XFL) come 21 December.

Strong business performance

Another reason for Afterpay's impressive share price performance is its continued strong business performance.

In late October, the BNPL giant released its first quarter results. Management stated that Afterpay had seen strong performance across all regions, leading to underlying sales increasing from $1.9 billion to $4.1 billion in just one year, an increase of 115%. The sales total marked yet another record in Afterpay's impressive run.

Afterpay's active customers also increased globally, rising 98% to 11.2 million within the year. Unsurprisingly, the company reported the majority of growth was driven by younger Gen X and Gen Z customers.

Foolish takeaway

With Afterpay's impending addition to the ASX 20 index come 21 December, shareholders have been bidding up the S&P/ASX All Technology Index (ASX: XTX)'s largest member. The index inclusion will result in a flow of capital from passive and active funds into Afterpay's stock.

At the time of writing, the Afterpay share price is sitting at $120.31 per share.

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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