Afterpay Shares Drop 5.9% alongside US Tech Stock Fall

Afterpay logo

At time of writing, Afterpay Touch Group Limited [ASX:APT] are trading at just $15.05, marking a 5.93% decrease from yesterday’s figures.

In fact, the past week and a bit has seen a steady drop in Afterpay’s share price, showing an astounding 28.8% drop since last Monday’s trading price of $21.13.

Before then, Afterpay was seeing a consistent rise in their share price. The infotech company’s innovative approach to a ‘lay-by-like’ purchasing system has fast become an Aussie hot topic of the tech-innovation boom.

Where is the drop coming from?

Since there’s been no announcements on the ASX since the beginning of this decline, it is likely in response to the rough week of tech trading on the US stock exchange.

Recent scepticism over the integrity of big social media players like Facebook and Twitter have led to a US Congress hearing to determine the preventative action these companies are willing to place against perceived ‘hate speech’ on their platforms.

Such controversy has likely deterred potential investors into the tech-stock market, who see the sector riddled with privacy violations and manipulative propaganda.

This uncertainty appears to have spread into our own ASX, with a lot of our hottest listed tech stocks — like Telstra and Dreamscape — feeling the blow.

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Quitting while we’re ahead

On the flip side, this drop in Afterpay’s share price may be a result of their existing investors making big on the uptrend of the stock.

Since late May 2018, the company’s stocks have been steadily climbing. In three months, shares have almost tripled in value.

But with an unsteady US market and the looming threat of another global financial crisis approaching, shareholders appear to be taking profits while they’re up for grabs.

What this could mean for Afterpay

Only time will tell whether the US tech market share drop will correct itself. Hopefully, if and when it does, Afterpay shares are likely to mirror the pattern.

Otherwise, with no sign of significant structural changes to the company, and promising FY18 figures to rest on, there’s no reason why Afterpay cannot bounce back from this recent hurdle.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: While the tech sector has faced a recent hammering, the biotech sector is only just getting started. Check out this free report on ‘The Key to Spotting Breakout Biotech Stocks’, to make sure you are ready to snatch up some of the hottest biotech stocks at the right moment. Download your free report now.

Ryan Clarkson-Ledward

Ryan Clarkson-Ledward

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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