Can Afterpay’s magic run continue?
As Elon Musk and Tesla have shown us, when dizzy valuations and high short interest collide, the results can be spectacular. If the Australian stock market has a battleground stock to rival Tesla it is the buy now, pay later juggernaut Afterpay, which has doubled to a market capitalisation of over $3 billion in just six weeks.
In that time, the shorts have been decimated as Afterpay successfully kicked off its US adventure.
As it stands, Afterpay which closed on Friday at $14.57 is now valued at 100 times forward earnings and at 50 times based on fiscal 2020 earnings forecasts.
So is the run done? Not even close, if you ask the bulls.
One chuffed investor went as far as to suggest Afterpay’s shares could be worth up to $50 if you make some rather heroic comparisons to Amazon.
The sell-side broker community was only marginally less buoyant. And it’s hard to blame them given how well their calls have played out.
Bell Potter, which championed the stock, lifted its price target to $21 following Afterpay’s July update calling it a “next generation PayPal” which it said was attracting the attention of Visa and Mastercard.
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