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Why the Afterpay Touch share price is tumbling 4% lower on Monday

The Afterpay Touch Group Ltd (ASX: APT) share price has had a disappointing start to the week.

In afternoon trade the payment solutions company’s shares are down over 4% to $12.95.

The good news for longer term shareholders is that its shares are still up over 100% since this time last year in spite of today’s share price weakness.

Why is the Afterpay Touch share price tumbling lower today?

Although the market as a whole has given back its morning gains and slipped into the red this afternoon, selling has been a touch more intense in the tech sector.

So much so the S&P/ASX 200 Info Tech index is down 0.6% at the time of writing in comparison to the S&P/ASX 200 index which is 0.2% lower.

The catalyst for this appears to be Nasdaq 100 futures which are pointing 1% lower this afternoon, indicating that U.S. tech shares could come under fire tonight.

The fall in Nasdaq futures contracts appears to coincide with Chinese trade data that has just been released.

According to CNBC, China’s trade surplus with the U.S. grew 17% from a year ago to hit US$323.32 billion in 2018. However, the growth in the volume of goods that China imported and exported slowed last year, which appears to demonstrate that President Trump’s trade tariffs started to negatively impact the world’s second-largest economy late last year.

This appears to have led to further concerns that China’s economic growth may underwhelm this year.

In addition to this, news that Wesfarmers Ltd (ASX: WES) operated Kmart had a weak Christmas trading period may have sparked concerns that the Afterpay platform may not have had a stellar holiday season in Australia.

Investors may not have long to wait to see how the company performed during Christmas. Last year Afterpay Touch provided a trading update on January 16 and could do the same in 2019.

But it isn’t just the Afterpay Touch share price that is sliding lower today. Fellow tech shares Bravura Solutions Ltd (ASX: BVS) and WiseTech Global Ltd (ASX: WTC) are also trading lower.

Should you buy the dip?

Afterpay Touch is certainly a high risk investment due to the enormous amount of future growth that has already been built into its share price.

But if your risk profile allows it, I think it could be a good option for investors if included in a balanced portfolio.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, Bravura Solutions Ltd, and WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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