Afterpay (ASX:APT) share price sinks despite new product launch

The Afterpay Ltd (ASX: APT) share price is lower today, despite launching a new product to make in-store purchases easier. Click on for the details.

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The Afterpay Ltd (ASX: APT) share price is 3.48% lower today. At the time of writing, shares in the buy now, pay later (BNPL) provider are trading for $102.20.

Today's negative movement comes at the same time as the company launches its new offering for in-store purchases – Afterpay Card.

For comparative purposes the S&P/ASX 200 Index (ASX: XJO) is down 0.24%. BNPL competitor Zip Co Ltd (ASX: Z1P) is down 4.58% to $7.40.

Let's take a closer look at the company's announcement.

Afterpay Card

Afterpay Card is a digital offering customers can access using their mobile wallets, much like a credit or debit card.

Afterpay users will be able to tap the card at merchant terminals to make the purchase. Just like its app, customers will pay for their product over four instalments, interest free. Afterpay estimates around 22% of its Australia and New Zealand total gross merchandise volume (GMV) comes from in-store purchases.

"Over the past five years we have built a strong in-store offering, with tens of thousands of merchants currently offering Afterpay in-store in Australia," co-CEO and co-founder Nick Molnar said.

"The new Afterpay virtual card, which will sit in a customer's digital wallet, is an evolution of our offering, making it even easier for millions of our Australian customers to split their in-store payments in four instalments without incurring interest — ever.

"There is enormous opportunity to reach a new customer, who out of habit or preference, opts to shop in-store, to easily and seamlessly utilise Afterpay at the point of checkout."

Mr Molnar says the new product will benefit merchants as well as consumers.

"Merchants will also benefit as a result of the Afterpay Card as it will remove integration effort and costs for their business to support Afterpay in-store, which in turn provides more merchants for customers to shop at, in more verticals, with more merchants on offer."

Merchants will be prevented to from surcharging users who use this product, just as with other Afterpay products. The Reserve Bank is, however, looking at ending this practice in Australia for BNPL providers.

Afterpay's half-year results

For the 6-months ending 31 December 2020, Afterpay recorded a 106% increase in operating sales to total $9.8 billion. Earnings before interest, tax, depreciation and amortisation (EBITDA) grew a massive 521% over the prior corresponding period (pcp) to $47.9 million.

The number of customers grew by 80% on the pcp to 13.1 million. Over 8 million of the company's customers live in North America (a 127% increase in the region on the pcp).

Afterpay recorded a loss of $79.2 million, which was in line with expectations.

Afterpay share price snapshot

The Afterpay share price hit a 3-month low last week. It's down 18.67% from 1 month ago and 36.14% from its all-time high. The Afterpay share price is still 435.08% higher than this time 52-weeks ago. The Zip Co share price is similarly 422.7% higher from this time last year.

Many BNPL providers have seen their share price slide because of rising treasury bond yields. As well, competition in the sector is heating up, with both Commonwealth Bank of Australia (ASX: CBA) and PayPal Holdings Inc (NASDAQ: PYPL) entering the fray.

Afterpay has a market capitalisation of $29.2 billion.

Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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