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Why the Afterpay Price Got Slashed Today

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

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.

Afterpay-stock-price

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.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978) (“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute "research" as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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