Afterpay’s Share Price Down by 4.54%

After zigzagging erratically, the Afterpay Touch Group Ltd [ASX:APT] share price plummeted this morning and is now down by 4.54%, at time of writing.

This continues a worrisome trend for the fintech giant, with its share price having fallen heavily last week on the back of several announcements.

Is it too risky owning Afterpay shares in the short term?

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 The scoop on what’s really going on…

Last week, the company initially made several positive strides. It announced a capital raise of $317.2 million at $23.00 per share. These proceeds would be used to aid Afterpay’s global expansion across both the US and the UK.

Three Afterpay executives then offloaded a total 4.5 million worth of shares. After the trading halt was lifted, Afterpay’s shares soared.

It seems the company’s lofty goal of reaching $20 billion underlying sales by 2022 was met with applause.

But things went topsy-turvy the next day, after the company announced the Australian Transaction Reports and Analysis Centre (AUSTRAC) would require Afterpay to employ an external auditor for tighter regulations.

The news saw shares fall over 8% immediately, leaving capital raisers in the dust.

A goldmine or one for the watch list?

While the share price might be acting nuts at the moment, this isn’t unusual for a fintech giant on the back of several big announcements.

It has to eventually calm down at some stage in the coming months, and investors may like to sit and weather the storm in the meantime.

But it’s understandable if you’re concerned at the dodgy timing of the company’s capital raise with its reveal of AUSTRAC’s investigation.

It could be an idea to hang out on the sidelines until more news drips into the feed…just what the news will be is anyone’s guess.

As I’ve said before, it’s important to remember that this is an industry fraught with competition. Apple, Google, Facebook, Visa, Mastercard, Paypal, and Stripe are companies that have been facilitating digital payments long before Afterpay.

But Afterpay’s product is unique. And it’s hard to deny that the company is spreading across the world (and internet) like wildfire. In 2019, the company saw a 143% growth in underlying sales/gross merchandise value (GMV) compared to the previous period.

Regardless of what happens with AUSTRAC, I’d certainly be keeping my eye out on the fintech company moving forward.

The turbulence could very well be temporary.

Regards,

Ryan Dinse

For Money Morning

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Ryan Dinse is an Editor 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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