The share price of Afterpay Ltd (ASX: APT) could be a winner because of the coronavirus due to one key reason.
Afterpay shareholders are currently down 51% from where the share price was just before the declines started. At one point the share price was down 78% a couple of weeks ago.
What does the coronavirus mean for Afterpay?
Afterpay provides payment options for customers to buy from merchants in-store or online. The problem is that barely anyone is going to shopping centres right now with shoppers limiting their social interaction and discretionary spending.
It's not just in Australia. But in the US there are serious effects too. Millions of Americans are losing their jobs. Two of the USA's biggest population areas, New York and California, are in lockdowns. Not good news for Afterpay in the short-term.
Is there a silver lining?
Yes there is according to broker Morgan Stanley (as reported by the AFR).
According to the investment bank, whilst in-store underlying sales may dry up for Afterpay, online trade could be a boost for the buy now, pay later company with merchants trying to grow online sales to beat the hardship caused by the lockdowns.
Afterpay's partnership with eBay Australia has apparently just gone live and app downloads are at record levels excluding end of year sales.
The half-year to June 2020 is expected by Morgan Stanley to show revenue growth 'slow' to 110%, with growth of 75% and 40% in the subsequent halves.
However, investors need to be careful of rising credit losses for Afterpay as well as difficulties with delivery services which may hamper sales.
Is the Afterpay share price a buy?
Morgan Stanley has a price target of $19 for Afterpay, which is below the current share price, so there's the investment bank isn't calling Afterpay a screaming buy right now. But Afterpay is down by over 50% from its height under two months ago – so it's clearly cheaper – but I think there are even better opportunities out there on the ASX.
