Why the Afterpay (ASX:APT) share price is exploding even higher today

The Afterpay Ltd (ASX: APT) share price is on fire again today, just one trading day after hitting a new all-time high last week.

The Afterpay share price is sitting at $155.19 at the time of writing, up 2.57% today. But earlier this morning, the buy now, pay later (BNPL) market darling again hit another new record high, this time $156.50 a share.

That means that Afterpay shares are up more than 10% over the past week alone, more than 33% over the past month, and more than 300% over the past 12 months. At the company’s current market capitalisation of $44.15 billion, Afterpay is now worth more than ASX blue chips like Coles Group Ltd (ASX: COL), Telstra Corporation Ltd (ASX: TLS) and Transurban Group (ASX: TCL).

So what on earth is going on here?

Investors step on the gas

There are 2 powerful tailwinds that Afterpay is sitting in to note before we even discuss today’s move.

The first is the recent good form the entire S&P/ASX 200 Index (ASX: XJO) has been experiencing over the past week in particular, off the back of the Reserve Bank of Australia’s (RBA) announcement last week.

The RBA announced that it would double-down on its quantitative easing (QE) programs and probably keep interest rates at the record low of 0.1% until 2024. This has lit a fire under the ASX and sent investors chasing growth stocks in particular. Afterpay fits that bill very well.

Secondly, the BNPL space has also been driving investors’ wild. Late last month, Afterpay’s rival Zip Co Ltd (ASX: Z1P) delivered a very positive quarterly update, in which it outlined that transaction volumes were up 103% to $1.6 billion over the quarter. Since BNPL is still a relatively new industry, perhaps it’s still a case of a ‘rising tide lifts all boats’ for investors.

These are all strong undercurrents that are certainly not hurting investor sentiment over Afterpay today.

The Afterpay-ty rages

But perhaps the biggest catalyst for Afterpay today is attention from brokers.

According to reporting in The Sydney Morning Herald (SMH) this morning, broker Seaport Global has slapped Afterpay shares with a ‘buy’ rating and a new price target of $175 a share. That implies an upside from the current share price of roughly 13%. Perhaps that was all that some investors already experiencing FOMO over Afterpay needed this morning.

The SMH report also states that another broker in Morgan Stanley is also bullish on Afterpay, noting the company’s app downloads in the United States in January were double what they were a year ago. That in turn, Morgan Stanley argues, bodes well for future revenue growth.

The Afterpay share price – arguably the longest and wildest party on the ASX – looks set to keep raging if those assessments prove accurate.

More reading

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• Why Argosy Minerals, Sigma, Vocus, & Zip shares are charging higher
• Treasury Wines (ASX:TWE) share price lifts amid media speculation
• Why the News Corp (ASX:NWS) share price is at multi-year highs

Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, and Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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