Afterpay is hardly the only BNPL game in town, but it is one of the most successful. In its FY 2020, Afterpay's losses more than halved to A$19.8 million ($14.3 million from A$42.9 million in the 2019 fiscal year. Revenue rose 112% to A$11.1 billion. Meanwhile, an average of 17,300 new customers joined the Afterpay platform per day.
In the U.S., Afterpay is growing especially fast. Its active U.S. customers more than tripled over the past fiscal year, while revenue in the country surged to A$4 billion from A$900 million a year earlier.
In May, Tencent paid US$300 million for a 5% stake in Afterpay in a bid to develop a larger global fintech footprint. In a statement, the Chinese firm said that Afterpay's service aligns well with consumer trends developing globally. Afterpay could partner with Tencent if the Australian firm sought to enter Hong Kong, mainland China or both markets.
However, Afterpay could face headwinds in the years ahead. The most obvious would be increased competition. In the U.S., on which Afterpay is betting big, the Australian firm will face off against Sweden's Klarna, PayPal, Shopify and others. Amazon, which has a 50% share of the U.S.'s huge e-commerce market, may decide to create a BNPL solution of its own rather than adopting Afterpay.
Like so many fintech unicorns, Afterpay is also continuing to spend heavily on international expansion irrespective of the effects on its balance sheet, wagering that fast customer acquisition will win the day.
"In many ways, current [share]prices have presumed success embedded in the price," Medallion Financial managing director Michael Wayne told Australia's Finder. "Only time will tell whether or not these businesses can avoid customer attrition and bad debts, and achieve enough scale to justify these valuations."