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Shares in this Australian company grew 740% during Covid-19

A woman shopping for clothes with a mask on on the left, and a Afterpay sign in a shop window.
One Australian company has made many people rich, including its co-founders, who have become instant billionaires. (images: Getty, AAP)

Buy-now-pay-later provider Afterpay is the darling of the Australian share market this year, despite the Covid-19 recession.

At the depths of panic selling in March, the stock was as low as $8.90. Now, on the morning of Friday July 10, it's $74.60.

This means if you bought $1,000 of Afterpay shares on March 23, you would now have $8,400. Not bad at all.

This week the fintech company became one of the top 20 largest companies in Australia.

Its co-founders Nick Molnar and Anthony Eisen announced this week they would cash in, and are set to pocket $250 million from selling down some of their stake.

A graph showing the Afterpay share price on July 10, 2020 compared to March 23, 2020.
Afterpay's share price has rocketed up since March (Source: Google).

Both men will end up on rich lists this year with each now possessing $1.5 billion, according to Nine. Their fortunes were just $182 million when the coronavirus panic started in March.

Molnar, at age 30, is now Australia's youngest self-made billionaire. He beats Canva co-founder Melanie Perkins for the record, who is 32 years old.

While this Australian company has also made many mum-and-dad investors wealthy, the incredible rise has torn experts.

After all, Afterpay has not yet turned a profit.

Is Afterpay overpriced or will it keep growing?

Morningstar thinks it's overvalued, believing its "fair price" to be $24.10. Morgan Stanley thinks it could go as high as $100.

Citi changed its mind from $27.10 to $64.25 in recent times.

While it has plenty of competitors in the buy-now-pay-later field, Afterpay does seem to have first-mover advantage and brand recognition. And there is nothing stopping shops from using multiple providers.

Plus Afterpay's business model sees other businesses – retailers – do the marketing of its services, because it's in their interest to attract additional customers.

Earlier this week, Afterpay announced it would raise $800 million of capital. This war chest could be used to buy up smaller rivals.

Disclosure: The journalist owns Afterpay shares.

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