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Why the Afterpay (ASX:APT) share price is going bananas

The Afterpay Ltd (ASX: APT) share price is going bananas right now after revealing strong growth of its US operations.

What did Afterpay reveal?

Although the company didn’t make any ASX announcements, it did tell the media in a press release about the success of its Afterpay Day sales in the US.

Afterpay Day is a retail day – sort of like Black Friday – where retailers offer discounts and do sales. This time was the first time that the sale event was extended to bricks and mortar shopping in the US.

The buy now, pay later business saw its US customer base 35% higher than August 2020, whilst traffic to Afterpay’s brand partners was also “strong”. Afterpay sent almost six million referrals to global merchants from its shop directory during the sale’s duration.

What categories saw the most demand?

The ASX share revealed that Crocs, Nike shoes, Fenty Beauty, Ulta Beauty and UGG were the most purchased items. Most Americans apparently used their phones to make those purchases, with around 86% of transactions occurring on mobile devices, with an average of four items in the shopping basket.

Afterpay boasted that its app has received the most downloads in the buy now, pay later category. Interestingly, LA was the place where most shoppers came from, with Chicago being second and Brooklyn being third.

There were a number of brands that started with Afterpay in-store as well as online including Steve Madden, MAC Cosmetics, Jo Malone London, Aveda and so on.

Afterpay said that it now has more than 16 million customers in the US and a total of 75,000 global retail merchants. It says that it still has a strong pipeline of merchants continuing to launch in 2021.

Management comments

Afterpay Head of North American Melissa Davis said: “Afterpay Day was the perfect way to support our merchant partners as retailers welcomed their customers back to their physical stores and the economy starts to rebound. As evidenced by the numbers, Afterpay Day delivered new customers, drove increased sales and increased basket sizes online and in-store for the more than 3,000 participating merchants in North America.”

Time to jump on Afterpay shares?

Investors certainly seem to think so, with the Afterpay share price up around 8.5%. The market remains excited about Afterpay, despite the business not getting much closer to making a net profit. However, it has certainly revolutionised the retail world. If it can capture more market share outside of retail then it could definitely be one to keep an eye on.

I’m just not sure what the right price is. Looking at the growth rate of revenue it’s among the fastest compared to other ASX growth shares. However, competition continues from others like Zip Co Ltd (ASX: Z1P), Sezzle Inc (ASX: SZL), PayPal Holdings Inc (NASDAQ: PYPL) and soon from Commonwealth Bank of Australia (ASX: CBA). Future success is not guaranteed.

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Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW.

Note: the report is 100% free.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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