The Afterpay Ltd (ASX: APT) has been one of the most bizarre ASX shares to watch in this S&P/ASX 200 Index (ASX: XJO) bear market we've been going through over the past month.
Most ASX shares have experienced some volatility to be sure.
But Afterpay shares have been in a league of their own.
Afterpay last peaked at $41.14 in mid-February after starting 2019 at around $12 a share. Afterpay was one of the best performing mid-cap ASX shares on the market last year and for the first month of 2020.
But then the Afterpay share price was hit hard by the ASX market crash that has come hand-in-hand with the coronavirus pandemic – falling all the way from its all-time high to $8.01 on Monday (an 80% fall to Afterpay's lowest share price since June 2018).
But since Monday, the Afterpay share price has rallied 158% to today's level of $20.69 (at the time of writing). That's right, this is a company that has gone up 158% in just five days.
What on earth is going on with Afterpay shares?
This extreme volatility can be put down (in my view) to the market trying to work out what Afterpay's future looks like.
Some ASX shares have a well-accepted, decidedly bleak short-term future ahead of them – I'm talking about companies like Flight Centre Travel Group Ltd (ASX: FLT) and Qantas Airways Limited (ASX: QAN) here. These companies' share prices have responded accordingly.
For others like Woolworths Group Ltd (ASX: WOW) and CSL Limited (ASX: CSL), it's not so bad – again, reflected in these companies' share prices.
But no one really knows how this coronavirus situation will affect Afterpay. Will people stop buying clothes and other discretionary products through the company's platform for the time being? Will there be a rise in defaults and non-payments? Or will housebound millennials be browsing online stores and 'buying now, paying later' in record numbers?
These scenarios and more are all possible – making it very difficult to determine the company's short-term future.
Remember, in the short term (as the great investor Benjamin Graham once said), the stock market is a voting machine.
Foolish takeaway
Right now, it's clear investors are voting that it's 'not so bad as we thought on Monday'. Who knows what they'll be voting next week? All I know is that if you're interested in picking up shares of this company, you should be paying very close attention!
