Afterpay Touch Group Ltd (ASX: APT) hit a high of $27.83 on 27 June 2019, then on 29 June 2019 the share price fell sharply to $25.07. This is a significant decrease in the stock price, and a blow to the end of the financial year.
The decrease in the price of Afterpay is attributed to Visa Inc (Visa) announcing that the company would begin testing a new payment instalment system. This move by Visa positions the company in direct competition with Afterpay.
In particular, Visa announced on 27 June 2019 - “Through a pilot program, participating issuers and merchants will be able to offer their customers an instalment payment experience at checkout using a Visa card they already have in their wallet.”
Visa also announced that this is:
Scheduled to be available to clients and partners in January 2020, Visa’s instalment solutions will be one of the first new payment innovations available through Visa Next.
As this new technology hits the market, Afterpay may endure steep competition from Visa.
Even though investors might become worried about this news, Afterpay share price since the 2 January 2019 ($12.00) has doubled to 1 July 2019 ($24.44). Additionally, the share price has increased today (Monday 1 July 2019), starting the day at $22.52 and increasing to $24.44, showing a partial recovery since the drop last Friday.
The market will be closely watching APT in the coming weeks, to observe whether a full recovery occurs.
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