4 reasons the Afterpay share price just hit a record high

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Payment Technology

On Friday the Afterpay Touch Group Ltd (ASX: APT) share price continued its positive run and raced to an all-time high of $31.07.

This recent gain means the payments company’s shares have gained a remarkable 150% since the start of the year.

Here are four reasons why its shares have just reached a record high:

Stronger than expected growth.

In FY 2019 Afterpay Touch reported a 140% lift in underlying sales to $5.2 billion, an 86% increase in total income to $264.1 million, a 93% jump in its net transaction margin to $136.5 million, and a 130% lift in active customers to 4.6 million. This strong growth smashed even the most bullish expectations. For example, Goldman Sachs was expecting the company to report total customers of 4,546,134, underlying sales of $5.05 billion, total income of $255.8 million, and group net transaction profit of $108.4 million.

US business continues to impress.

One of the key drivers of Afterpay’s growth in FY 2019 was its U.S. operations. Underlying sales in the world’s largest retail market reached almost $1 billion in FY 2019 and currently have a run-rate in excess of $1.7 billion. The company also revealed that as of August 21 the U.S. business had 2.1 million active customers, which accounted for 40% of its total customers on the date. In addition to this, the network effect in the U.S. has led to the company acquiring 50% more new customers per day than the FY 2019 daily average. This bodes well for its performance in FY 2020.

UK business starts strongly.

Another big positive in FY 2019 was the company’s incredibly positive start to life in the UK market. Management advised that over 200,000 UK customers were on-boarded in the first 15 weeks, which is even higher than the US at the same time post-launch. And given how the company estimates that it has a $700 billion opportunity in this market, I’m not surprised to see investors respond positively to this news.

Visa partnership agreement.

It wasn’t that long ago that there were concerns that payments giant VISA was going to disrupt Afterpay with its own launch into the buy now pay later market. However, these fears look to have been overblown after the two parties entered into agreements which will form the basis of a strategic partnership to support the development of innovative new solutions and business growth in the US market. The agreements will facilitate Afterpay’s ability to expand the delivery of its services to merchants and customers in a more flexible and efficient manner. If all goes to plan, this could be a key driver of growth in the coming years.

Afterpay wasn’t the only share hitting an all-time high. Impressive full year results from Nanosonics Ltd (ASX: NAN) and WiseTech Global Ltd (ASX: WTC) also sent their shares to record highs at the end of last week.

If you missed out on these gains, don’t worry. Because this top share has been tipped as a market beater over the next 12 months and beyond.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and WiseTech Global. 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.

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