Afterpay Share Price Cheap? A Look at BNPL and Coronavirus 

With the onset of the coronavirus, global markets are experiencing massive falls in value with many countries now telling people to stay home from work and away from public areas. With the public fearful of losing income (and thus not being able to spend it), how has the global shutdown impacted the Afterpay Ltd [ASX:APT] share price and the buy now pay later industry more generally? 

Afterpay fell to $9.90, representing a drop of nearly 76% in just four weeks. Today, the Afterpay share price is up a massive 38.84% to $13.75. 

Afterpay share price 

Source: Optuma 

Afterpay is the industry leader in the buy now pay later sector (BNPL) and it is joined by some smaller players in Quickfee Limited [ASX:QFE] and Sezzle Inc. [ASX:SZL]. 

Afterpay and Quickfee are Australian based, and Sezzle is headquartered in Minneapolis, US. 

As you can see in the charts, all three companies will feel the impact of the coronavirus. 

Quickfee share price sheds less than Sezzle share price

Afterpay was listed on the ASX in 2017. Both Sezzle and Quickfee were listed in the last 12 months and have market caps of $43.32 million and $19.96 million respectively. Can the smaller of the two weather the storm of the coronavirus? 

ASX QFE

Source: Optuma  

ASX APT

Source: Optuma 

Taking a closer look at the two smaller lenders, it can be seen that Sezzle has recorded a decline in price from its IPO of $2.50, plummeting to $0.55 at time of writing. Representing a loss of 78%, taking their market cap to $43.32 million. 

Whereas the Quickfee share price recorded a fall of over 48from IPO of $0.29 to a share price at time of writing of $0.15, on a market cap of $19.96 million. 

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Afterpay share price potential support prices

AfterpaySezzle and Quickfee all provide technology-driven payment solutions for consumers and businesses, and all have experienced significant growth in the lead up to the emergence of the coronavirus.  

Cities across the globe are currently shutting down. Asking people to stay indoors and work from home, and many industries will feel the impact of closed cities.  

A global recession is now being forecast by many large institutions, with Deutsche Bank being the latest to join the chorus. 

Retail, a big part of Afterpay and Sezzle’s business, is certainly in the firing line if this happens. 

Afterpay has not been immune to these market concerns which is evidenced by the volatility in our share price over recent weeks and days,’ noted Afterpay Managing Director Anthony Eisen in a letter to shareholders. 

Afterpay share price

Source: Optuma 

Afterpay shows historical support levels of $8.04 and $5.23. Will these levels be enough to stop the decline? 

Time will tell. 

With Sezzle and Quickfee being relatively new to the market, Quickfee seems to be holding up better in the charts, relatively speaking. 

This may be in part due to their model, which focuses on professional services, not retail. 

With the smaller of the two both showing strong growth since the time of their listings, the question becomes: do they have enough cash and customer loyalty to survive the coronavirus? 

Interesting to note in early March, Afterpay had two new substantial holders in the form of Morgan Stanley and Lone Pine Capital potentially indicating confidence in Afterpay long term. 

I expect more of these so-called, ‘value buys’ to start to creep into the BNPL sector in the coming months. 

If you are a big firm, and have a long investment horizon, at some point it makes sense to buy again. 

If you are looking to shield yourself from this downturn, learn about two potentially less volatile types of assets in our ‘Coronavirus Portfolio.’ You can get the report for free here 

Regards, 

Carl Wittkopp, 

For Money Morning 


Carl Wittkopp writes for Money Morning and has a diploma in Financial Planning. He specialises in technical analysis.

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