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Why the Afterpay share price fell a further 10% today

The Afterpay Touch Group Ltd (ASX: APT) share price has continued its slide on Monday morning and fell as much as 10% in early trade.

This follows a 12% decline in the payment company’s share price during the last hour of trade on Friday.

What has happened?

On Friday the Afterpay Touch share price came under pressure after payments giant Visa announced the start of a pilot program that will allow participating issuers and merchants to offer their customers an instalment payment option at the checkout by using a Visa card.

This appears to have sparked fears amongst investors that Visa might cut out Afterpay as a middleman and make its business model defunct.

Due to the significant decline in its shares on Friday afternoon, the Australian stock exchange sent the company an ASX Price Query request. As the name implies, this requests an explanation for why a company’s share price has made a large move.

This morning the company responded to the Australian stock exchange’s request.

Afterpay Touch’s response.

Afterpay Touch advised that it was not aware of any information that could explain the recent trading in its securities.

The Australian stock exchange operator then asked Afterpay Touch if the decline could have been caused by reports that Visa is launching its aforementioned pilot program.

It responded: “Media reporting may have influenced the recent trading in APT securities however APT is unable to confirm that the change in price or increase in volume was specifically related to this factor. There are many factors which may influence the intraday price and trading volume of listed securities. We note that other ASX listed companies operating in this sector (including Zip Co (ASX: Z1P) and Splitit Payments (ASX: SPT)) also experienced similar movements in share price over the same period.”

After which, it ended the matter by confirming that it is in compliance with listing rules. For now, with the company giving little away, investors will have to decide for themselves whether the Visa development is a threat or not.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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