The Afterpay (ASX:APT) share price is down 16% in a month. Here’s why

Why have Afterpay shares had a month to forget?

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The past month has actually been a pretty decent one for ASX shares. The S&P/ASX 200 Index (ASX: XJO) has spent the last 30 days or so hitting a series of all-time highs, and the ASX 200 remains up around 1% from where it was a month ago. But the Afterpay Ltd (ASX: APT) share price hasn’t been so lucky.

Yes, Afterpay has had a month to forget. Even just today, the buy now, pay later (BNPL) pioneer is down a nasty 3.39% to under $99.31 a share at the time of writing. That’s the first time Afterpay has gone under $100 a share since early June. Over the past month, Afterpay shares have now lost a whopping 16.6% on current pricing.

So what’s gone so wrong for BNPL?

Well, the primary catalyst for this downward slide was a double whammy that came earlier this month. On 14 July Afterpay shares fell almost 10% in one day, followed by its BNPL competitors in Zip Co Ltd (ASX: Z1P), Sezzle Inc (ASX: SZL) and Laybuy Holdings Ltd (ASX: LBY).

Why this panicked sell-off? Well, that was the day ASX investors got the news that none other than Apple Inc (NASDAQ: AAPL) would possibly be expanding into the BNPL space with ‘Apple Pay Later’

Additionally, on the same day, we heard the news that fellow US tech company PayPal Holdings Inc (NASDAQ: PYPL) would be removing late fees from its own ‘Pay in 4’ BNPL product.

PayPal and Apple are obviously global behemoths in their respective spaces, and hardly the ideal choice to have as a competitor. As such, investors punished Afterpay and the ASX BNPL shares on this news, and they have been under pressure ever since. It’s not the first sign of intense competitive pressure in this space.

We have seen companies like Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd. (ASX: NAB), Mastercard Inc (NYSE: MA) and American Express Company (NYSE: AXP) all launch BNPL or ‘interest-free credit’ products over the past few years. But perhaps PayPal and Apple were two straws too many on the camel’s back.

Where to now for the Afterpay share price?

As we covered yesterday, there are still some investors who think Afterpay shares are a buy. Morgan Stanley is one. This broker currently has Afterpay shares rated as a buy, with a 12-month share price target of $145 a share.

At the current Afterpay share price, the company has a market capitalisation of $28.76 billion.

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American Express is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen owns shares of American Express and Mastercard. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Apple, Mastercard, PayPal Holdings, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings, 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, Mastercard, and PayPal Holdings. 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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