A resurgence in buy now, pay later shares and a tech index comeback could be helping the Afterpay Ltd (ASX: APT) share price rally.
The post Why the Afterpay (ASX:APT) share price is up 10% this week appeared first on The Motley Fool Australia. –
However, the leading ASX buy now, pay later (BNPL) company has bounced off lows with conviction, rallying up to 10% higher this week. What’s behind Afterpay’s recent sign of strength?
Why is the Afterpay share price rallying this week?
Broader BNPL sector bouncing back
ASX-listed BNPL shares have largely bounced off near-term lows, with strong performances this week despite broader market volatility.
The Zip Co Ltd (ASX: Z1P) share price hit a 5-month low of $6.48 last Thursday, and has rallied almost 20% since.
US-based rival, Sezzle Inc (ASX: SZL) also bounced off 1-month lows of $7.00 last Friday, and is up 12%.
BNPL shares with a smaller market capitalisation and lack of international expansion were the most hard-hit when the sector started selling off. The likes of Laybuy Group Holdings Ltd (ASX: LBY), Openpay Ltd (ASX: OPY) and Splitit Payments Ltd (ASX: SPT) have all slumped more than 50% in the last 6 to 12 months.
The Laybuy share price has slipped lower this week, but understandably so after a $35 million capital raising at 50 cents per share, or a 26.5% discount to the closing price before the announcement. Openpay and Laybuy have both pushed higher this week.
Over on Wall Street in the US, the Affirm Holdings Inc (NASDAQ: AFRM) share price also staged a strong rally last night, perhaps setting precedence for ASX-listed BNPL shares on Friday. Affirm bounced strongly off lows, surging 8.80% to close at US$54.89.
Afterpay shares stand tall amid Wednesday’s selloff
Wednesday was a sea of red for the S&P/ASX 200 Index (ASX: XJO), with a sharp fall of almost 2%.
Typically, such a significant decline in the broader market would drag the Afterpay share price lower. However, its shares managed to withstand the selloff, closing the day almost 1% higher.
Love coming back to tech shares
The S&P/ASX 200 Info Tech (INDEXASX: XIJ) has taken a beating in recent weeks, down 20% between 15 April and 13 May. The large cap movers for the tech index include Afterpay, Xero Ltd (ASX: XRO) and WiseTech Global Ltd (ASX: WTC), all of which have slumped to near-term lows.
This week, the ASX200 tech index has managed to find its footing and climbed 7.4%.
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