The Afterpay Ltd (ASX: APT) share price has made a strong rebound in April following a significant underperformance in late-February and March.
Why the Afterpay share price is bouncing back this month
The Afterpay share price hit a one-month high of $123.99 this morning, or a 23% increase this month before cooling down to around $121.85 at the time of writing. That's a gain of 17.8% this month.
Interestingly, the company has not announced any market sensitive news or catalysts this month that could otherwise drive the share price.
The improvement in the Afterpay share price could be seen as a broader rally in tech shares after a brutal sell-off in late-February. The S&P/ASX Information Technology (INDEXASX: XIJ) is up almost 10% in April, after falling more than 20% between 11 February and 9 March.
Morgan Stanley has been the only broker to provide updates for the Afterpay share price so far in April.
The broker assessed the Commonwealth Bank of Australia (ASX: CBA) and its entry into the Australian BNPL market. CBA has made the move to undercut merchant fees which could put pressure on merchant margins for Afterpay.
As a result, the broker reduced Afterpay's group merchant margins by 13 basis points and Australian merchant margins by 60 basis points for FY23.
The Afterpay share price is the odd one out this month
The Afterpay share price is a standout performer amongst its BNPL rivals this month. In terms of returns this month:
- Zip Co Ltd (ASX: Z1P) up ~11%
- Sezzle Inc (ASX: SZL) up ~13%
- Splitit Payments Ltd (ASX: SPT) up ~9%
- Humm Group Ltd (ASX: HUM) up ~1.5%
- Openpay Group Ltd (ASX: OPY) flat
- Laybuy Holdings Ltd (ASX: LBY) down ~1%
- Affirm Holdings Inc (NASDAQ: AFRM) down ~1.5%
What immediately stands out is that ASX-listed BNPL shares with significant US exposure including Afterpay, Zip and Sezzle are outperforming. While Afterpay's additional exposure to countries such as France, Spain and Italy could be a driver of its outperformance.
Excluding Affirm, the weaker BNPL shares also have a smaller market capitalisation relative to Afterpay, Zip and Sezzle. While Sezzle is approaching a $1 billion market capitalisation, Openpay and Laybuy have market caps of less than $200 million.
