Afterpay’s Share Price Plummets 4% after Ending Week in Red

The Afterpay Touch Group Ltd [ASX:APT] share price has fallen, after their US peers ended last week in red. The US tech industry as a whole lost a combined US$75 billion in market value on Friday. The Federal Open Market Committee (FOMC) made some hostile comments recently, which may have scared away tech investors.

As one of the most volatile stocks on the market right now, Afterpay’s share price is currently sitting at $12.95.

What caused the fall?

Afterpay has enjoyed a successful couple of years, delivering strong returns to early investors and spreading through retail outlets around the world like wildfire.

It’s likely that Afterpay’s price decline is simply a symptom of general market sentiment. If other tech stocks are falling, Afterpay won’t be immune.

Only last week, the payment solution giant’s share price rocketed 13% after a positive business update revealed strong sales performance and customer growth year-to-date in FY19. And the number of retailers using the Afterpay platform is growing at an overwhelming rate: EB Games, ASOS Australia, Tommy Hilfiger, Kogan.com Ltd [ASX:KGN], Village Roadshow [ASX:VRL] and many more…

But it’s not all sunshine and roses at Afterpay’s headquarters. In October this year, the government regulator announced it would release a report on the non-bank consumer lending sector in December.

Given the horrors uncovered after the royal commission earlier this year, it’s probable that non-bank lenders will see a similar public scathe. This also might have spooked the market.

Could Afterpay be found guilty

The big picture…

Afterpay always has been and still is a company with fantastic scope for growth.

Many investors were initially concerned about the competition Afterpay faced — from Paypal and Apple to Visa and Stripe, it’s not a small arena we’re playing in here. But the uniqueness of Afterpay’s product looked set to trump those concerns.

But now we have a bigger fish to fry: Afterpay’s ethics. With Christmas around the corner and tempting Afterpay loans a finger click away, it’ll be interesting to hear the regulator’s thoughts later on this year.

It’s a wildly successful fintech and a great product, but it’s got to play by the books or the volatility will only continue.

Regards,

Ryan Dinse

For Money Morning

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Ryan Dinse is a contributer at Money Morning. He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur. With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle. Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.  


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