How will the Afterpay (ASX:APT) share price react when US rival delivers trading results overnight?

Will Zip Co Ltd (ASX: Z1P) and the Afterpay (ASX: APT) share prices be impacted by the earnings results of a US BNPL rival?

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A woman nervously crosses her fingers, indicating hope for positive share price movement

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Shares in Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) are in the spotlight this morning following the overnight release of Affirm Inc‘s (NASDAQ: AFRM) third-quarter results. 

Affirm, the largest buy now, pay later (BNPL) share listed in the United States, has tumbled to record lows in recent weeks. 

Why Afterpay and Zip shares are in focus 

The US market is the centrepiece of growth for both the Afterpay share price and Zip. 

In the case of Afterpay, the US was the first region to record more than $1 billion in underlying sales in a single month and is now the largest contributor to its overall business. The same can be said about Zip with its Quadpay business set to outpace Australia and New Zealand revenues in the near term. 

Affirm will report its third-quarter results on Monday night. Surprisingly, the company only has regional exposure to North America, which could provide key insight as to how the heavyweight region is performing. 

Should investors get their hopes up?

BNPL shares have struggled to rally in recent weeks, even on the back of positive announcements and quarterly results. 

In the case of Affirm, the company previously topped second-quarter revenue and gross merchandise expectations on 11 February but its share price still managed to slip 10% on the day. 

The company delivered quarterly revenues of US$204 million compared to the US$130 million a year ago, while analysts had forecast US$189.4 million. Similarly, its gross merchandise volume increased to US$2.1 billion from US$1.3 billion, compared to consensus estimates of US$1.7 billion. 

Foolish takeaway

The Affirm third-quarter earnings conference call can be found here. With its shares down some 40% year-to-date, the question is: will the company put its best foot forward to restore confidence? Not only for its shareholders but to potentially bring life back into the BNPL sector including ASX-favourites Afterpay and Zip. 

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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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