Afterpay’s Share Price Up 8.44% despite Retail Fears| ASX:APT

This afternoon, we’re seeing the share price of Afterpay Touch Group Ltd [ASX:APT] shares shot up by 8.44%, following the milestone announcement of reaching 3,300 retail partners in the United States, and 1.5 million customers. This is great news for the ‘buy now, receive now, pay later’ service, especially as we’re seeing a depressing trend continuing through the retail sector, despite the RBA’s interest rate cut of 1.25% yesterday.

Perhaps, as consumers start to grow desperate and fearful of the times ahead, they’re wanting all the help they can get.

At time of writing, Afterpay’s share price is trading at $24.20, an increase of $1.88.

More on Afterpay’s share price movement

It’s hard to say whether the good news will continue for Afterpay, considering the current environment we find ourselves in. It seems the mainstream news has begun to catch on to the dire situation we find ourselves in — as can be seen with one of today’s headlines from the ABC, ‘Australia’s economy slows to levels last seen during the GFC’. And not only that, we could be seeing another cut in our rate come October, the RBA again placing pressure on the government to correct the situation that is quite clearly out of their hands.

But like the RBA, Afterpay’s method of putting off your payments for a sometimes unnecessary want isn’t always the best choice. All you’re doing is postponing the inevitable, and sometimes dangerous. And believe us, you may be paying for it later.

Australian retailers suffered heavily in April, combined with low wage rises and unstable job security. Australians are eating at home more and counting their dollars. ANZ’s Felicity Emmett believes consumer spending is the most telling sign of what’s to come.

While retail spending accounts for only around 30 per cent of consumption, falling house prices and ongoing soft income growth will have weighed on consumer spending in the quarter.

However, department stores saw a spark in sales, through their discounting. Maybe this will also give people the confidence to use the Afterpay option more.

What can we expect next from Afterpay?

Don’t get me wrong — this is great news for the tech company. More and more people are catching on to non-traditional payment options in a time of overvaluation.

But it’s impossible to see what’s coming next when we’re entering the winter of our economy.

Either way, we’ll be keeping you up to date with all the latest movements.


Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

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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