Why ASX BNPL shares like Afterpay, Zip, and Sezzle are sinking

There are likely a couple of reasons ASX-listed BNPL shares are taking a tumble today.

| More on:
a woman peeps over a desk with finger tips visible and eyes wide staring at a falling red arrow.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's a rough day on the market for investors in ASX BNPL (buy now, pay later) companies like Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P), and Sezzle Inc (ASX: SZL).

At the time of writing, shares in these companies are down a whopping 9.46%, 9.38%, and 9.24% respectively.

While there are many reasons why these share prices are moving – among them the reported entering of Apple Inc (NASDAQ: AAPL) into the BNPL sector, another factor may be the sharp rise in inflation in the US.

Historically, perceptions of rising inflation have been damaging to growth stocks like Afterpay and Zip.

Let's take a closer look.

ASX tech down as US inflation up

It's not just BNPL shares that are suffering today. Despite a rising S&P/ASX 200 Index (ASX: XJO) – up 0.44% – the S&P/ASX All Technologies Index (ASX: XTX) is down 1.32%. It follows on from a fall in the tech-heavy Nasdaq Composite overnight.

Motley Fool Australia's own chief investment officer Scott Phillips says that the performance of American stocks and Australian shares usually correlate.

"I think it's common for the ASX to follow US markets, almost slavishly," he previously told this reporter.

"The old saying is 'when America sneezes, Australia catches a cold'".

The previously mentioned inverse relationship between inflation and growth stocks could be behind the fall in the Nasdaq, along with the news of Apple's entry into the market.

Reuters is reporting last month's inflation of 0.9% – the largest in 13 years – is greater than economist expectations of 0.5%. Despite a 5.4% rise in annual CPI, most experts quoted by Reuters say the figures are probably one-off.

"June's CPI numbers looked scary but, once again, we see that it was mainly temporary price increases that pumped up the figures," economist Robert Frick told the publication.

Despite those reassurances from experts, investors may be worried by the spectre of inflation. That's judging by the massive falls in the Afterpay, Zip, and Sezzle share prices.

ASX BNPL share price snapshots

This isn't the first time a sell-off possibly linked to inflation has hit the Afterpay share price. In May, shares in the ASX BNPL provider fell 5% on inflation fears. Sezzle and Zip shares have also faced similarly bad days. These companies often tend to move in tandem with one another.

Despite a red day for these companies, it's been a green year. Over the past 12 months, Afterpay, Zip, and Sezzle shares have increased 61%, 5.7%, and 7.1% respectively.

The 52-week highs of these companies are $160.05, $14.53, and $11.99.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Apple, and ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on BNPL shares

A woman sits back and enjoys the view from a paraglider, indicating share price lifts for ASX travel and adventure shares
BNPL shares

Up 71% in 3 weeks, have Zip shares topped out?

Despite the stellar run higher, Zip shares are still trading at a fraction of their February 2021 highs.

Read more »

A woman sits on a chair smiling as she shops online.
BNPL shares

Why is the Zip share price the best-performing ASX 300 stock so far this year?

The best-performing ASX 300 stock of 2024 so far is an unlikely hero.

Read more »

A happy girl in a yellow playsuit with a zip gives the thumbs up
Share Gainers

If I'd put $5,000 into Zip shares on 9 October, here's what I'd have now!

The stars have been aligning for Zip shares.

Read more »

woman using affirm to pay
BNPL shares

Up 288% in 6 months, Zip share price tipped for more outsized gains

Zip shares have rocketed 288% in just six months.

Read more »

A businessman stacks building blocks.
BNPL shares

Up 93% since October, why are Block shares marching ahead again on Friday?

ASX 200 investors have been snapping up Block shares.

Read more »

A man wearing glasses and a white t-shirt pumps his fists in the air looking excited and happy about the rising OBX share price
BNPL shares

Zip share price up 58% in 7 trading days! What's going on?

This BNPL provider has been on fire recently. But why?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
BNPL shares

Shares sold: Why Zip is under fire from its own shareholders

Some Zip investors had their shares sold without their knowledge.

Read more »

Sad woman with her hand on her head and holding a credit card.
BNPL shares

Zip share price tumbles 9% despite explosive first-half growth

Zip had a strong half and delivered a big improvement in key metrics.

Read more »