The Fascinating Story of Afterpay and Its Share Price Journey
Afterpay has become one of the most talked about companies in Australia in recent years. Its innovative buy now, pay later model has captured the imagination of consumers and investors alike. Let’s take a look at Afterpay’s share price history and some of the key events that have shaped its remarkable trajectory.
Afterpay Ltd was founded in 2014 by Nick Molnar and Anthony Eisen, two young Australian entrepreneurs. The company launched with a simple idea – allow shoppers to receive products immediately and pay for them in four interest-free installments. This would increase conversion rates for retailers while making purchasing more affordable and convenient for consumers. In May 2016, Afterpay listed on the Australian Securities Exchange (ASX) with an initial share price of $1.00. The stock finished its first day of trading at $3.80, valuing the company at $440 million. While still early days, it was clear that investors recognized the potential in Afterpay’s innovative approach.
Over the next few years, Afterpay experienced phenomenal growth. The company expanded into new markets like the US and UK and added major retailers like Urban Outfitters, Prada, and Forever21. Afterpay’s network effects were clear – more retailers brought more customers, which in turn brought even more retailers. Afterpay’s share price reflected this rapid growth. By mid-2018, shares were trading above $15, giving the company a market valuation of over $4 billion. Afterpay joined the ASX 200 index and was now considered a major Australian tech success story.
COVID-19 Accelerates Growth
The COVID-19 pandemic in 2020 led to a dramatic acceleration in Afterpay’s growth. With consumers stuck at home and shifting shopping online, Afterpay saw a massive increase in transaction volume. In FY20, underlying sales processed by Afterpay grew 96% to $11.1 billion. Afterpay’s share price went on an absolute tear during this period. Shares rose from around $8 in March 2020 to over $100 by February 2021. Afterpay’s market cap exceeded $30 billion, making it one of Australia’s most valuable companies. The pandemic had shown that Afterpay was rapidly becoming a ubiquitous global payments brand.
Recent Events and Share Price Movements
Afterpay’s share price has been on a rollercoaster ride over the past year. It hit an all-time high of $160 in February 2021 before declining to around $70 in September. This sell-off was driven by rising bond yields and concerns over increased regulation of the BNPL sector. However, strong FY21 results in August sparked a revival in Afterpay’s share price. The company reported underlying sales growth of 78% to $21.1 billion. Afterpay also announced a major US expansion through a partnership with Amazon. This sent Afterpay’s share price back above $100 in late August. Most recently, Afterpay agreed to an acquisition by payments giant Square (now Block) for $39 billion in stock. This deal was seen as validation of Afterpay’s leadership in the high-growth BNPL space. Afterpay shares now trade under Block’s ticker and at a significant premium to the pre-acquisition price.
- Afterpay innovated a win-win payments model that aligns incentives for consumers, retailers and the company itself. This powerful network effect has driven rapid adoption.
- Exceptional execution by the leadership team has allowed Afterpay to capitalize on massive shifts like ecommerce growth and the decline of credit cards.
- Afterpay’s success shows that new financial models can disrupt traditional payments. Regulation will need to evolve to keep pace with this innovation.
Afterpay’s remarkable share price growth reflects its status as a transformational fintech leader. While the future is uncertain, Afterpay has already cemented its position as one of Australia’s greatest technology success stories. Its next chapter as part of Block will be fascinating to watch.
Is Afterpay safe?
Afterpay is generally considered safe to use for both customers and merchants. It uses bank-grade security measures like PCI compliance and encryption to protect user data. Afterpay also doesn’t charge interest or require hard credit checks, making it less risky for consumers. Merchants receive full payment upfront from Afterpay, so they avoid risk from late customer payments. Overall, Afterpay’s business model aligns incentives between all parties.
What is the value of Afterpay’s US subsidiary?
Afterpay’s US business was valued at around $20 billion in mid-2021, making up over half of Afterpay’s total valuation. However, some analysts believe this valuation is questionable since US employees have been granted options in Afterpay’s US subsidiary at lower valuations. This means future US growth may not fully accrue to ASX-listed Afterpay shareholders. The true value likely lies somewhere between the implied market value and the option valuation.
Who accepts Afterpay?
Afterpay is accepted by over 100,000 merchants globally across industries like fashion, beauty, homewares, electronics, and more. Major retailers accepting Afterpay include Target, Sephora, Urban Outfitters, Nike, SHEIN, and others. Afterpay has a strong presence with online retailers but is expanding to in-store payments through partnerships.
How do I use Installments by Afterpay?
Using Installments by Afterpay online is simple – just choose it as your payment method at checkout on eligible purchases. You’ll pay 25% upfront and the rest in 3 installments over 6 weeks. Afterpay also now offers in-store payments through integrations with major POS systems. Just look for the Afterpay logo when checking out in-store.
Why is the Afterpay share price so volatile?
Afterpay’s share price volatility is driven by its status as a high-growth tech stock without profits. Rapid revenue growth and passionate investor views on both sides lead to dramatic price swings. News like regulation, market crashes, and takeover bids also disproportionately impact the Afterpay share price.
Does Afterpay build credit?
No, Afterpay does not currently report payment history to credit bureaus, so it does not directly help build credit scores. Afterpay only does a soft credit check that has no impact on scores. However, always making on-time Afterpay payments can demonstrate responsible financial behavior.
Are there extra fees when using Afterpay?
The only fees when using Afterpay are late fees if you miss a scheduled payment. Afterpay charges up to 25% of the order value as a late fee. As long as you pay on time, there are no interest charges or hidden fees – you just pay the original order amount in 4 installments.
How do refunds and returns work with Afterpay?
Refunds with Afterpay go back to your original payment method once the merchant processes the return and Afterpay receives the funds. This process can take up to 10 business days. Afterpay installments are adjusted accordingly for partial refunds. Return policies still follow the merchant’s rules when using Afterpay.