The Afterpay Ltd (ASX:APT) share price is sinking on Wednesday despite the release of a investor presentation this morning…
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The Afterpay Ltd (ASX: APT) share price is out of form on Wednesday and sinking lower.
At the time of writing, the payments company’s shares are down 3.5% to $106.91.
This latest decline means the Afterpay share price is now down 33% from its 52-week high.
Why is the Afterpay share price sinking today?
Investors have been selling Afterpay’s shares due to weakness in the tech sector on Wednesday. This has been driven by a very poor night of trade on the tech-focused Nasdaq index overnight.
According to CNBC, there are a number of potential reasons for the weakness in tech stocks. This includes fears about rising inflation, concerns the US Federal Reserve may have to taper monetary stimulus earlier than anticipated, and speculation that corporate tax rates will increase.
Whatever the reason, the concerns have spread to the Australian share market and have sent the S&P/ASX All Technology Index (ASX: XTX) down 1.5% this afternoon. This compares to a 0.5% gain by the S&P/ASX 200 Index (ASX: XJO).
While the presentation didn’t include any new sales data, it did highlight a number of positives.
One of those was its strong performance during the third quarter. For the three months ended 31 March, Afterpay reported a 104% increase in underlying sales to $5.2 billion. This was driven by increases of 211% and 277% in the United States and United Kingdom, respectively.
At the end of the period there were 14.6 million active customers globally, which was up 75% since the same time last year.
Afterpay also highlighted the quality of its customer base and the benefits of its platform for consumers.
Management notes that contrary to popular opinion, Afterpay customers in Australia have lower personal liabilities than non-Afterpay customers.
It explained: “This is not the result of demographic differences. A like-for-like comparison with a matched group (i.e. similar age, gender and income as Afterpay customers) shows that Afterpay customers have lower personal liabilities than similar people who do not use Afterpay. Afterpay customers also save more and have higher incomes.”
As for the benefits that consumers get from using Afterpay, chief among them is credit card fee savings. The company estimates that Afterpay saves customers the equivalent of $110 million in credit card fees each year.
Unfortunately, though, despite how positive the presentation was, it hasn’t been enough to prop up the Afterpay share price today.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.