Why the Afterpay (ASX:APT) share price is down 7% in 2021

The Afterpay Ltd (ASX:APT) share price has been very volatile in 2021. Here’s what shareholders need to know right now…
The post Why the Afterpay (ASX:APT) share price is down 7% in 2021 appeared first on The Motley Fool Australia. –

afterpay share price

The Afterpay Ltd (ASX: APT) share price is trading lower again on Thursday morning. At the time of writing, the payments company’s shares are down almost 2.5% to $110.42. 

This means the Afterpay share price is now down over 7% since the start of the year.

Why is the Afterpay share price down 7% in 2021?

Investors have been selling Afterpay’s shares for a number of reasons in 2021. One is profit taking after some outrageous gains over the last 12 months. Another reason has been rising bond yields, which have put pressure on the tech sector.

In addition to this, concerns over increasing competition appears to have been weighing on the company’s shares. This follows the launch of BNPL services by PayPal, Shopify, and even Commonwealth Bank of Australia (ASX: CBA) this week. You can read more about the latter here.

Should Afterpay shareholders be concerned by increasing competition?

Goldman Sachs has been looking into the BNPL sector. It believes that further growth lies ahead for the sector thanks to a number of structural drivers. The broker also feels that Afterpay is well-placed to overcome the increasing competition.

It commented: “Declining popularity of credit cards and rising use of debit cards are likely to remain structural drivers. As a transaction-driven business model it is necessary for BNPL providers to scale with merchants and consumers to generate sustainable network effects.”

“This is why we believe relatively few players will dominate this sector in each market and flag that APT is showing the operational signs of being one of the key winners in this space (strong customer growth, merchant pipeline and frequency of use trends). Competition will likely be fierce but the market growth opportunity is substantial and unlikely to prevent APT from achieving our customer and Gross Merchandise Value forecasts.”

Where next for the Afterpay share price?

While Goldman Sachs’ analysts believe the Afterpay share price can still go higher from here, it isn’t enough for the broker to put a buy rating on its shares.

Its analysts have retained their neutral rating and $127.60 price target. This implies potential upside of 15.5%

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

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.

The post Why the Afterpay (ASX:APT) share price is down 7% in 2021 appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!