The Afterpay share price is up 1,000% in 6 months

The rise of the Afterpay share price is fast becoming the success story of 2020. The BNPL giant's shares have increased a staggering 1,000% since March.

Investor riding a rocket blasting off over a share price chart

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Afterpay Ltd (ASX: APT) is fast becoming the success story of 2020. The Afterpay share price has risen a staggering 1,000% since its March lows and is rocketing higher again this week.

Why the hype around the Afterpay share price?

The hype surrounding the Afterpay share price isn't new. The company is arguably the most well known buy now, pay later (BNPL) brand in Australia, even though it's only been operating for around three years. During that time, more and more retailers have been displaying the Afterpay logo on their doors and windows, so it's a brand that is hard to ignore.

Earlier this year, Chinese fintech giant Tencent Holdings, acquired approximately 5% ownership, driving the Aftrepay share price higher. Tencent is a well known player in the tech world, so having it onboard as a major shareholder certainly made Afterpay investors happy.

Recently, Afterpay announced its intentions to expand into Europe through the $82 million acquisition of Pagantis, a Spanish fintech company in the BNPL space. Although based in Spain, Pagantis currently operates in Spain, France and Italy, providing multi-region access for Afterpay.

Justifying the acquisition, is Afterpay's intention to use this brand to access the massive $500 billion eCommerce market in the European Union.

The Pagantis brand will ultimately be rebranded as Clearpay, with the existing technology being merged into the core tech provided by Afterpay. As a rough guide, Afterpay has earmarked the expansion plans to commence early next year.

As the BNPL giant already has operations in Australia, New Zealand, the United States and the United Kingdom, Europe is a logical next step.

Afterpay share price performance

The Afterpay share price is currently trading at $92.48, at the time of writing. This is almost crazy, considering the BNPL giant's stock was selling for less than $10 in March this year!

The last six months of trading represents a return to investors in excess of 1,000% – a staggering run.

When Tencent Holdings announced its 5% stake in the company, the Afterpay share price jumped more than 20% in a single day. This latest announcement around a European Union venture has had a similar effect, sending the stock in excess of 10% higher in Tuesday's trade.

Afterpay has returned an astronomical 3,300% to investors since its initial public offering (IPO), and doesn't look to be slowing down any time soon.

Upcoming results

Afterpay issued an announcement to the ASX on 18 August stating it would be releasing its FY20 results on Thursday 27 August at 10am, Melbourne time. While the expansion plans are very exciting for the BNPL player, investor concerns will no doubt be circling the fact that Afterpay is still unprofitable, losing more than $40 million per year. With revenue increasing, however, a break even could be achieved in a few short years.

Main competition

Afterpay is by no means the only player in this space, but it is one of the biggest and has a massive market share. Some of Afterpay's biggest competitors include Sezzle Inc (ASX: SZL), Splitit Ltd (ASX: SPT) and Zip Co Ltd (ASX: Z1P).

Foolish takeaway

The Afterpay share price has sustained a massive run for a company that isn't making any profit. I believe this is largely due to investors piling into the stock and wanting to share in the success. However, just because there's no profit yet, this doesn't mean it won't be there in the near future. Companies in this space need time to generate a profit and, at the end of the day, Afterpay is only three years old, so it's still very early days. The results release on Thursday this week should be very interesting given all the company's recent developments.

glennleese 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's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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.

More on Share Market News

Retired couple hugging and laughing.
Share Market News

Eyeing retirement: Do you really need $1 million?

AustralianSuper recently weighed in.

Read more »

Happy woman working on a laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a pleasant end to the trading week for investors this Friday.

Read more »

Close-up of a business man's hand stacking gold coins into piles on a desktop.
Opinions

If I had a big cash pile like Warren Buffett, here's how I'd spend it in 2025

I'd put Buffett's billions to work straight away.

Read more »

Man pointing at a blue rising share price graph.
Technology Shares

Up 30% in a month, this ASX 200 tech share is 'a compelling opportunity': expert

Analysts from listed investment company WAM Capital say this ASX 200 tech stock is worth watching.

Read more »

Emotional euphoric young woman giving high five to male partner, celebrating family achievement, getting bank loan approval, or financial or investing success.
52-Week Highs

5 ASX 200 shares hitting multi-year highs after strongly rebounding from tariff turmoil

These stocks have hit new price milestones amid a day in the green for the ASX 200.

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
Share Market News

3 key takeaways from the 2025 Macquarie Conference

More than one hundred companies presented at the Macquarie Conference this year. Here’s what we learned.

Read more »

An executive in a suit smooths his hair and laughs as he looks at his laptop feeling surprised and delighted.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A happy investor sits at his desk in front of his laptop and does the mexican wave with his arms to celebrate the returns from his ASX dividend shares
Share Gainers

Why Chrysos, GQG Partners, Macquarie, and Webjet shares are storming higher today

These shares are ending the week on a positive note. But why?

Read more »