Why has the Afterpay (APT) share price jumped today?

Posted: 24 June 2021 12:01 pm
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Shares in BNPL provider Afterpay have jumped a stunning 32% in the last month.

Shares in buy now pay later (BNPL) leader Afterpay (ASX: APT) are normally among the most traded stocks in Australia. On Thursday, the stock was also among the biggest gainers on the ASX boards, surging 6.3% to $130.60 at the time of writing.

Why the Afterpay stock price is higher today

Afterpay has announced that it will issue virtual cards through its app in the US, which will allow its users there to shop at a broader range of retailers, including those that have not signed up directly with the company.

US customers will now be able to generate a single-use card to use at checkout for businesses including Amazon, Nike, Target, Sephora, Macy’s, Victoria’s Secret, Nordstrom and Walgreens among others, the company said in a media release.

The 12 brands represent almost half of all the ecommerce volume processed in the United States, Afterpay said, noting that US ecommerce growth had nearly tripled in the first 3 months of 2021.

Indeed, the US has been a key growth market for Afterpay ever since its entry there in 2018, and the introduction of the new service puts it in a firmer footing there against rivals Zip Co Ltd (ASX: Z1P), Sezzle (ASX: SZL) and Klarna.

US competition

Klarna had pioneered the use of the virtual card technology that allows the BNPL provider's app to be used for shopping anywhere. Customers of Zip Co-owned Quadpay, which operates in the US market, already use a virtual card at any outlet that allows the use of a Visa or Mastercard. Both operators have seen a surge in transactions.

Sezzle last month also expanded in the US, the world’s largest retail market after announcing a 3-year agreement with US retailing giant Target to provide its interest-free payment plans in-store and across Target’s digital platforms, giving it substantial reach and customer base.

Meanwhile, analysts expect BNPL competition to rise further as more players take advantage of strong global economic recovery following the vaccine rollout. Financial industry heavyweights such as PayPal and Australia’s Commonwealth Bank have already announced their own BNPL segment plans.

Despite this, Afterpay shares have seen a sharp comeback in recent weeks. The stock has now recorded a stunning 32% rise in the last month alone, as investors feel reassured about its growth prospects.

Considering investing in Afterpay shares?

If you are keen to buy shares in Afterpay you should consider investing through an online share trading platform.

Keep in mind that not all platforms offer the same list of stocks. Some trading platforms offer US stocks only, so make sure to select a platform that offers ASX-listed stocks.

Choose from the dozens available for Australian investors. Compare the features and fees from the plethora of trading platforms available for Australian investors.

Looking for a low-cost online broker to invest in the stock market? Compare share trading platforms to start investing in stocks and ETFs.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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