Quick take: Afterpay share price hits $96 as BNPL bulls return

BNPL stocks rally, Sezzle posts record Q3 results

It has ultimately been an uneventful month for Afterpay (APT) – with the company neither releasing any revelatory market updates, nor have any analysts dramtically upped their price targets on the stock.

Despite that, the stock is up about 30% – hitting an intraday and all-time high of $96.08 per share on Tuesday, 13 October. At March’s low of $8.01 per share against today’s intraday high, APT has seen its stock rise close to 1,100%.

In general, BNPL stocks have rebounded strongly over the last month – as competitive concerns potentially abate and as optimism around the outlook for Australian equities quietly returns. In that period Zip has gained ~35%, Sezzle has surged over 40% and Openpay has risen approximately 11%.

Other considerations

Looking at alternative data sources and possibly explaining APT's recent run-up, investors may have turned to Sezzle’s recent Q3 to infer Afterpay’s short-term operational performance.

As part of its third quarter release, Sezzle revealed an impressive set of operational metrics: reporting a 231.5% increase in Underlying Merchant Sales, a 178.1% increase in Active Consumers, while also noting that Average monthly UMS reached US$76.1 million. More positively still, it was noted that:

'Repeat usage has risen for 21 straight months and is a key driver to lowering loss rates and enhancing Net Transaction Margin.' Repeat usage from Sezzle's Active Consumer's stood at 89.0% by the close of Q3.

Macquarie analysts, making their own set of inferences based on Sezzle’s quarterly release, said:

‘Afterpay well placed to continue its growth trajectory: We remain constructive on Afterpay’s near term outlook with today’s Sezzle update confirming strong momentum in the BNPL (Buy Now, Pay Later) space in the US.’

‘We expect increasing network effects to drive momentum with the launch of US in store, Afterpay’s loyalty program and recent entry into Canada all contributing,’ Macquarie analysts added.

Overall, the investment bank remains positive on APT – expecting the company’s transaction volumes to double in fiscal 2021. In step with that, Macquarie currently has a 12-month price target of $90.00 per share and a Neutral rating on APT.

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