Afterpay share price: One key growth statistic you may have missed

‘APT’s US app downloads in Mar-2021 were >3x the amount in Mar-2020, and were even above the Dec-2020 seasonal peak.’

Afterpay share price ↑

Markets seem to have trouble staying pessimistic for too long.

After trading around the $100 handle in late March, Afterpay has seen its share price rebound firmly. In fact, from its 1-month low, the stock is up close to 20%, opening Wednesday’s session at $119.40 per share.

From their 1-month lows, the likes of Zip and Sezzle have also rebounded firmly, up approximately 12 and 14%, respectively.

Mind you, while the share prices of these companies have been pretty volatile, the fundamentals haven’t changed in that period. Reality may be no different, but the market seems to be a shade more accommodating right now.

As we’ve discussed consistently in the last few months, investors have grown increasingly skittish around the prospect of rising interest rates and inflation. This has seen a relatively well defined rotation from high-growth, high multiple stocks, into more ‘sensible’ value names.

As IG Market Analyst Kyle Rodda pointed out:

‘Although the world remains an uncertain place and risks to the markets are present, just for the here and now, market participants appear to be taking it in their stride.’

A few pretty crazy things have happened in between, too – the Archegos saga for one. Blowing up your $10 billion fund is one thing, almost taking down your prime brokers is another thing entirely. Credit Suisse apparently lost close to $5 billion on the trades gone bad.

But back to Afterpay…

With no new data from the company itself, investors are typically faced with the prospect of having to fill in the gaps themselves.

In this case, Morgan Stanley has turned to Bloomberg and Sensor Tower to get a better picture of Afterpay’s US app download performance.

Here’s what Morgan Stanley said about Afterpay:

‘APT’s US app downloads in Mar-2021 were >3x the amount in Mar-2020, and were even above the Dec-2020 seasonal peak. This suggests APT's platform in the US may be expanding more rapidly than we expect. Coupled with its recent entry into the EU, APT appears on track to build a global BNPL platform.’

Overall, Morgan Stanley remains bullish on Afterpay, reiterating their $159 price target and Overweight rating. That’s not quite as confident as they were before, mind you. In Mid-February MS analysts ratcheted up their price target on APT to $170. As investors fled the sector on mass, they lowered that price target.

Key risks to the downside include: slower revenue growth, weaker discretionary spending, ‘Rising bad debts amid macro downturn’ and an adverse change in the regulatory environment.

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