It's often labelled the hottest stock on the S&P/ ASX200 (ASX: XJO) and AfterPay Touch (ASX: APT) lived up to its billing yesterday after soaring 6.6% to $27.28 on no news.
Over the short term sentiment can be a powerful driver of stock prices and bidding up the hottest stocks on the share market is a popular trading strategy, but not a sound investing strategy.
As such anyone interested in the buy-now-pay-later space that includes Z1P Co Ltd (ASX: Z1P) and even a little-known start-up named Splitit Ltd (ASX: SPT) should exercise some caution.
AfterPay remains the clear market leader in the space and its shares could be printing new record highs for any number of reasons including a broker rating upgrade, news over its launch in the UK, or just because the rise of the heavy tech-heavy NASDAQ Index in the U.S. continues to drag tech shares in Australia higher.
For the six months ending December 31 2018 AfterPay took in $116.1 million in income but posted a widening net loss to $21.5 million.
Its current market value is $6.5 billion based on 238.8 million shares outstanding according to its latest regulatory filing. As such investors and traders should be able to see it has a lot of expected growth baked into its valuation.
