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Coronavirus volatility: Afterpay share price up 26%

The Afterpay Touch Group Ltd (ASX: APT) share price finished 26% higher today marking more coronavirus volatility.

I only just wrote an article this morning talking about how Afterpay was down around 75% before the market opened this morning.

The Afterpay share price is now only down 68% compared to a month ago. A share that falls 50% will have to rise 100% to get back to where it was. For example a share price of $100 that falls 50% to $50 will need to climb 100% to get back to $100 again. In other words, there’s a long way to go for Afterpay to get back to $40.

The buy now, pay later operator had plenty of investor buyers when its share price was above $30, so I’m not surprised to see that investors were piling in with its share price around $10.

Earlier this week Afterpay reassured shareholders that it was strongly positioned to get through this period.  

It also said that the average age of its customers is 33 years, meaning that its customer base is largely not close to the most at-risk age brackets of older people.

In terms of the financials, Afterpay said it has more than $1.09 billion of warehouse facilities, which are committed and not subject to traditional debt facility covenants.

The weighted average life of its debt facilities is 2.1 years. It also said that the duration of its receivables are matched to the duration of drawn debt at any given time.

It also said it has a strong liquidity position of $672 million, with $402.5 million of cash.

What will the Afterpay share price do next?

Who knows! It could go up because people think it’s very cheap. Or it could go down if investors get more nervous about the growing infection numbers in Australia, the US and the UK.

It’s hard to know because Afterpay is still a while away from making a profit.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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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