Is the Afterpay Share Price Hitting Resistance? (ASX:APT)

At the time of writing the Afterpay Ltd [ASX:APT] share price is trading at $97.49, down 3.86%.

On the back of the annual general meeting the APT share price fell away as the All Ordinaries [ASX:XAO] gained ground.

ASX Afterpay Share Price Chart

Source: Optuma

Can the Afterpay share price keep going up?

The explosion of online shopping saw Afterpay user growth accelerate, and at its peak the company gained 20,500 new users a day.

In an announcement from the recent general meeting, the growth of the company was evident:

Underlying sales and active customers more than doubled compared to the prior corresponding year, while active merchants increased by over 70%. Our net transaction margin increased 110% and represented 2.3% of our underlying sales. EBITDA, excluding significant items, was $44 million, up 73% on the prior year. And all of this was achieved against a backdrop of historically low loss rates.

All this saw the market company jump from $4.4 billion in June 2019 to $28.87 billion at time of writing.

Impressive, but will it hold? It’s a legitimate question to ask after this large of a run…

Headwinds starting to develop on APT share price chart

ASIC concluded a report into the ‘buy now, pay later’ sector recently, saying that:

21% of users had missed a payment and that 20% had gone without or cut back on essentials due to overspending.

Not the best statistic ahead of a long period of high underemployment and unemployment.

In the short term the APT share price looks to be hitting a ceiling lately.

ASX APT Share Price Chart 2

Source: Optuma

As you can see, the APT share price struggled to break the recent all-time high of $105.80.

To still be considered bullish this level needs to be surpassed. If the price falls back, the levels of $95.67 and $76.97 may be enough to halt the fall.

Despite its interest-free payments, you still need to pay the company back.

This means a job, first and foremost.

Going forward, I would not be surprised to see ABS and US jobs data play into the APT share price more.

That being said, with positive vaccine news, there could be more upside to go yet.

Time will tell, but there are certainly risks out there for the company.

Regulatory, macroeconomic, and competition risks spring to mind.

If you missed the APT share price take-off, don’t worry. We’ve got a great report detailing three small-cap fintechs that could succeed in a variety of market conditions.

You can download that report for free, right here.


Carl Wittkopp,
For Money Morning

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

Money Morning Australia