The Afterpay Ltd (ASX: APT) share price was out of form on Thursday and dropped lower following the release of a trading update.
The payments company’s shares fell almost 2.5% to $96.20.
How is Afterpay performing in FY 2021?
Afterpay’s update revealed that its strong form continued in November and during the all-important Black Friday and Cyber Monday promotional period.
According to the release, the company’s global underlying sales reached $2.1 billion for the month. This was an increase of 112% from the $1 billion reported in November 2019.
But arguably best of all, was news that the company generated $1 billion of underlying sales in the United States in November. This was the first time the company has achieved this level of sales during a month in any market.
Also catching the eye was its strong performance in the UK market. Underlying sales more than quadrupled to $200 million during the month.
Finally, its performance in the ANZ market remains strong. Afterpay reported a 54% increase in underlying sales to $900 million. This was a new monthly record for the region.
Customer numbers continue to grow.
A key driver of its record-breaking month in the United States was another rise in active customers.
With a number of significant retailers launching on the platform since the end of September, active customers in the United States increased by ~1 million. This means the total number of customers that have signed up to Afterpay in the country now exceeds 13 million.
Is the Afterpay share price in the buy zone?
One broker that was impressed with its performance in November was Goldman Sachs.
It commented: “We make material upgrades to our FY21-FY23 estimates as APT’s November trading update was clearly ahead of our prior forecasts in each geography.”
“While we continue to expect competitive pressures to build through 2021 with launches of similar products from PayPal (PYPL) and Shopify (SHOP) likely to gain some momentum, APT’s service seems to be resonating with consumers in all geographies given the frequency of use trends imputed in the update were clear,” it added.
However, while it has lifted its price target to $99.90, it has retained its neutral rating for valuation reasons. With the Afterpay share price at $96.20, this price target implies potential upside of just 3.8%.
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More reading
- 5 things to watch on the ASX 200 on Friday
- ASX 200 rises on Thursday
- ASX 200 up 0.3%: Fortescue rockets, Afterpay sales explode, Westpac APRA update
- Will the Afterpay (ASX:APT) share price hit new highs?
- These ASX shares are growing rapidly in FY 2021
Motley Fool contributor James Mickleboro 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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