The Afterpay Ltd (ASX: APT) share price has been on a tearing run in recent times.
Shares in the group have edged 1.5% lower in this morning’s trade as the S&P/ASX 200 Index (ASX: XJO) got off to a weak start.
Despite concerns of being overvalued at the start of the year, however, Afterpay’s value has rocketed 167.0% higher in 2020.
That has been music to the ears the buy now, pay later leader’s shareholders. But some have started to question whether or not the Afterpay share price is still good value.
Here are a few reasons why I think Afterpay’s stock can continue to rise in 2021.
Why the Afterpay share price can climb higher
For one thing, the company has shown an ability to maintain a low bad debts expense while growing.
There were concerns that Afterpay’s growth would see a similar rise in write downs and bad debtors. That hasn’t proved to be the case so far with strong technology systems keeping losses low.
I think the addressable market for Afterpay is also still significant. The group now has global operations including in the United States and United Kingdom.
More and more market entrants are trying to carve out a piece of the market. However, Afterpay is a true industry leader with a strong network and significant financial backing.
I think the global market remains a lucrative prospect for Afterpay. Tencent taking a 5 per cent stake in the business will only boost its profile in Asia.
The regulatory environment is starting to look more settled. We’ve seen numerous inquiries that have not restricted Afterpay’s growth in recent years.
If we see a strong economic bounceback from the coronavirus pandemic then I could see the Afterpay share price hitting $100 per share in early 2021.
Foolish takeaway
I think a combination of market opportunity and strong management is the key.
If Afterpay can carve out even a small piece of major international markets then it can be worth more than its current $23 billion.
These stocks could rocket in a Post-COVID world (FREE STOCK REPORT)
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
Find out the names of our 3 Post COVID Stocks – For FREE!
*Returns as of 6/8/2020
More reading
- Why the Jumbo (ASX:JIN) share price is moving higher today
- 3 ASX 200 passive investing shares to buy today
- Why ASX oil stock prices are set to slide this morning
- Is the Westpac (ASX:WBC) share price in the buy zone?
- Will the Fortescue (ASX:FMG) share price outperform in 2021?
Motley Fool contributor Ken Hall 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.
The post Why the Afterpay (ASX:APT) share price has further to run appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/30jS6HG
Leave a Reply