Will the Afterpay share price break $100 in 2020?

The Afterpay Ltd (ASX: APT) share price has been ripping ahead in the past few months. The company’s shares broke through all-time highs yesterday, surging more than 9% to hit a record high of $68.62 before closing out the day slightly lower at $68.16. 

So, what is fuelling the Afterpay share price and can it break the momentous $100 mark in 2020?    

What is fuelling the Afterpay share price?

Although Afterpay did not release any market sensitive news yesterday, the buy now, pay later (BNPL) giant did see some momentum on the back of another big-name brand going live on its platform. Afterpay’s United States Instagram page announced that the ASOS clothing brand is now up and running with the BNPL platform in the US.

In addition, the company received some positive momentum from analysts, with well-regarded broker Citi increasing its price target for Afterpay from $27.10 to $64.25. Analysts cited the broad and accelerated shift of consumers using e-commerce and Afterpay’s launch in the US and Canada as contributing factors.

How has Afterpay performed during the coronavirus pandemic?

Afterpay has been a poster child of the recovery in financial markets, following the heavy selling seen at the peak of the pandemic. After hitting a low of around $8 in mid-March, the company’s share price has surged more than 750% to its current all-time highs.

The BNPL provider has been red-hot since Chinese technology powerhouse, Tencent, took a 5% stake in Afterpay for $300 million. In addition to this strategic partnership, Afterpay has also reported strong growth overseas, especially in the US and United Kingdom. The rapid shift to e-commerce during the coronavirus lockdown period has also helped fuel the frenzy surrounding Afterpay shares.

Can the Afterpay share price hit $100 in 2020?

I believe there’s no doubt the Afterpay share price can hit the $100 mark. However, whether this can be achieved in 2020 after we’ve already seen such dramatic growth is another question. There are numerous tailwinds that could continue fueling the company’s share price growth. These include changing consumer behaviour, the company’s resilient revenue growth and its potential for further expansion.

Is it too late to buy shares in Afterpay?

To put it bluntly, I think so! In my opinion, the possibility of the Afterpay share price continuing along its current growth trajectory is unlikely. Whilst I’m confident Afterpay has the potential to crack the $100 mark, I personally wouldn’t advocate buying shares in the company after the phenomenal rally it has had this year.  

It’s important to note that, whilst analysts from Citi upgraded their outlook on Afterpay, the company’s lofty share price remains way above Bloomberg’s consensus share price target of $42.59. I think a prudent strategy would be to wait for a substantial pullback before buying shares in Afterpay.  

More reading

• Why Afterpay and this ASX share just hit record highs
• Afterpay share price hits $67! Are BNPL shares in a bubble?
• Why the Afterpay share price zoomed to a new record high today
• Why Afterpay, Bigtincan, Dicker Data, & NIB shares are racing higher
• ASX 200 up 0.9%: Citi lifts Afterpay price target, Webjet boosts liquidity

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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