The Afterpay Touch Group Ltd (ASX: APT) share price rose 4.8% today, is it going to hit $20 this month?
Afterpay Touch is the owner of the popular “buy now, pay later” app. As of 2018, Afterpay had over 2.5 million registered users world-wide, making it one of Australia’s true technology success stories.
Afterpay shares rise 5%
The Afterpay share price went up 4.8% today, marking a strong day for the ASX technology sector.
Other technology gainers include Xero Limited (ASX: XRO) going up 2.8%, Altium Limited (ASX: ALU) shares rose 3.8%, the WiseTech Global Ltd (ASX: WTC) share price went up 3.4%. The Appen Ltd (ASX: APX) share price went up 0.46%, but it still rose.
Afterpay shares have been on a tear since the start of the year, it is up 47% in just over two months.
One of the catalysts for this strong run has been the business development it gave to the market less than a month ago.
As a reminder, Afterpay reported to investors that underlying sales in the first half of FY19 was over $2.2 billion, up from $918 million a year ago, which represents 140% growth. That’s pretty impressive for 12 months’ work.
The US business processed $260 million of underlying sales in the first half, with annualised underlying sales now in excess of $500 million. It’s the US segment that could be the largest part of the business in the future due to the size of the potential market.
Afterpay had acquired 650,000 new customers at the time of the January update, as well as having more than 1,400 retailers transacting with Afterpay. The buy now, pay later business also said that 2,200 retailers have signed agreements with Afterpay or are in the process of integrating on the US platform.
Pleasingly, Afterpay also said that it’s working with two major US investment banks for another facility of up to US$300 million.
Is Afterpay going to hit $20?
Afterpay seems to be riding the wave of momentum again, I don’t think any value investor could call it remotely decent value at the moment. If Afterpay can keep growing revenue at more than 100% a year it could grow into its valuation, but there’s a lot that could go wrong between now and then, particularly if a recession hits.
If you’re looking for ASX shares that are growing quickly but are better value, I’d rather go for one of the rapid growth stocks in the free report below.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).