The Afterpay Ltd (ASX: APT) share price has found itself sliding 7% this week in stark contrast to its buy now, pay later (BNPL) rival in the United States.
The performance of US-listed Affirm Holdings Inc (NASDAQ: AFRM) is going gangbusters, with the Affirm share price up ~20% in the last four trading sessions to US$77.97.
Despite BNPL shares largely moving hand-in-hand, here's why the Affirm share price might be coming out ahead this week.
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Why the Affirm share price is outperforming
Recent acquisition targeting online returns
The Affirm share price is likely being propped up this week by the company's $300 million acquisition of Returnly on 21 April.
Returnly allows eligible consumers to receive an instant merchant credit upon initiating a return, allowing them to order a new or replacement item immediately. The company takes on the product return risk and settles the order in real-time, making the return and exchange process seamless and helping merchants drive higher repurchase rates.
Affirm observes that an estimated $428 billion in merchandise was returned to retailers in 2020.
Affirm is still playing catch up against the Afterpay share price
Taking a look at the bigger picture, Affirm's shares have slipped more than 45% from its February highs of US$146.90 and are down 15% since its first day of listing, where it closed at US$91.10.
By comparison, the Afterpay share price is down 25% since its all-time record high of $159.00.
Markets aren't made equal
The broader market could be a driving force behind Affirm's rebound.
The tech-heavy NASDAQ-100 (INDEXNASDAQ: NDX) has significantly outperformed the S&P/ASX 200 Index (ASX: XJO) in almost any time frame. The Nasdaq has increased 2.60% in the past four trading sessions, up ~9.60% year-to-date and up ~44% since its pre-COVID high.
By comparison, the ASX200 is ~0.25% higher in the past four trading sessions, up ~5.25% year-to-date and down 2.25% since its pre-COVID highs. However, the ASX200 may not be a good representation or a driving force for Afterpay, given its weighting towards financials and mining.
The S&P/ASX200 Info Tech (INDEXASX: XIJ) is down 4.50% year-to-date and up 32% since its pre-COVID highs, highlighting an underperformance in both a shorter and longer time frame.
This outperformance and more rich valuation of US-listed shares is also a driving factor of why the Afterpay share price is eyeing a US listing.
Afterpay still fetches a higher valuation
With a market capitalisation of $33 billion, the Afterpay share price is still the most richly valued BNPL stock, trading at approximately 67 times FY20 revenue compared to the 39 times of Affirm.
