What's driving the Afterpay (ASX:APT) share price to 8-month lows?

The Afterpay Ltd (ASX: APT) share price slips another 6% to an 8-month low. What's driving the Afterpay share price and its BNPL peers lower?

A dog looks confused and a little sad, indicating a dip in share price movement

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Gone are the days of a surging Afterpay Ltd (ASX: APT) share price. Its shares slipped to an intraday low of $81.85 today, dragging its year-to-date return to a grim -28%. 

What's been impacting the Afterpay share price? 

The BNPL sector can't seem to keep it together

In theory, the Afterpay share price should move in tandem with its ASX-listed and overseas BNPL peers, despite competing against each other for market share. The same arguably takes place for the big four banks, insurers, miners etc. 

At the height of the BNPL craze last year, the Afterpay share price surged 30% in quick succession from $70 in July to $90 in August. During the same period, competitors including Splitit Payments Ltd (ASX: SPT), Sezzle Inc (ASX: SZL) and Zip Co Ltd (ASX: Z1P) were also quick to double in valuation.

This was during a time where it seemed like any announcement could warrant a surge in share price. For example, when Zip announced a partnership with Ebay and launched its Zip Business division on 26 August 2020, it triggered its share price to jump 25% on the day. 

Fast forward to today, it seems the opposite could be taking place. 

Take Openpay Ltd (ASX: OPY) for example. The company delivered a solid 3Q21 update last month, alongside an expansion into the US$55.8b US and UK veterinary markets in partnership with ezyVet.

The company said that it "continues to move with urgency to capture market opportunity and disrupt major payments markets with its highly relevant and transparent offering for merchants and consumers". Despite the positive announcement, its shares edged 2.5% lower on the day. 

ASX-listed BNPL shares have been sharply sold off in recent weeks. Bigger players such as Sezzle and Zip have been able to stay in positive year-to-date territory. While smaller players such as Openpay, Splitit Ltd (ASX: SPT) and Humm Group Ltd (ASX: HUM) are fast approaching 6-12 month lows. 

Tech shares are falling out of favour 

The  S&P/ASX200 Info Tech (INDEXASX: XIJ) has slumped almost 20% year-to-date and is down a painful 4.87% at the time of writing.

This weakness might be understandable if the broader market was selling off. However, the S&P/ASX 200 Index (ASX: XJO) has pushed north of 5% since the start of the year.

US-listed BNPL giant dips 10% overnight 

To add further insult to injury, the US-listed Affirm Holdings Inc (NASDAQ: AFRM) share price dropped 10% lower on Wednesday night to a new all-time record low of US$49.82.

Foolish takeaway

The Afterpay share price is seemingly trapped between a rock and a hard place, with the broader tech sector selling off, BNPL peers sinking and its main US rival hitting record all-time lows. 

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's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited and Sezzle Inc. 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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