The Afterpay Ltd (ASX: APT) share price has been looking awfully bearish, setting lower highs and lower lows after its February peak.
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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More reading
- Should ASX investors be fearful of greed in the face of inflation?
- Why a2 Milk, EML Payments, Webjet, & Xero shares are pushing higher
- 5 things to watch on the ASX 200 on Friday
- 2 highly rated ASX growth shares
- Is the Afterpay (ASX:APT) share price cheap? Here’s what 1 broker thinks
The post Why the Afterpay (ASX:APT) share price is up 10% this week appeared first on The Motley Fool Australia.
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