Finder makes money from featured partners, but editorial opinions are our own.

Why have the Afterpay (APT) and Zip share prices tumbled?


Shares in the 2 BNPL leaders are down 20-30% in the last 12 months.

Shares in buy now pay later operators Afterpay (ASX: APT) and Zip Co Ltd (ASX: Z1P) are among the most traded shares and also among the worst performers in early trading on Wednesday.

At the time of writing, Afterpay shares were down 4% at $80.51, while Zip Co had dropped 4% to $4.15.

Why are the Afterpay and Zip stock prices losing ground today?

The latest slide in the 2 BNPL market leaders comes on the back of heavy losses in technology shares on Wall Street overnight, which has led to the tech index being the worst-performing sector on the ASX on Wednesday.

Investors in the US market have been spooked by the impending release of the US Federal Reserve's minutes on Wednesday (Thursday morning AEDT) from its last meeting, which could outline the timing of the at least 3 interest rate hikes that the US central bank has promised for 2022 to control rising inflation.

Traders typically pile into tech stocks for growth when economic concerns are high, but often rotate into other sectors that are more closely aligned to the economy during periods of growth.

Australia’s tech stocks, including those of BNPL leaders Afterpay and Zip, normally track the sector’s movements on Wall Street and the weak investor sentiment has therefore flowed from the US market into our own bourse.

Sector concerns

Afterpay’s shares in particular are also directly linked to US digital payments giant Square (NYSE: SQ), now renamed Block, due to their impending US$29 billion (AUD$39 billion) merger.

Since Afterpay shareholders will receive a fixed ratio of 0.375 Block shares for every share they own, any falls in the Block share price reduces the value of the deal for Afterpay investors. Overnight, Block shares slid 4.7% to $156.33 amid the technology selloff, and Afterpay shares have performed in line with that.

The uncertain investor mood has also put a spotlight on the near term risks facing the sector. Afterpay and Zip Co are among the 5 BNPL businesses facing increased scrutiny of their business practices as part of a new inquiry by the US financial regulator.

Sentiment in the BNPL sector has also weakened amid a ramp up in competition, with global financial giant PayPal, tech leader Apple and Australia’s top lenders CBA and NAB all announcing their entry in recent months, promising overcapacity in the market.

Think Afterpay or Zip Co shares are a buy?

If you are keen to buy shares in Afterpay or Zip Co you should consider investing through an online share trading platform.

Keep in mind that not all platforms offer the same list of stocks. Some trading platforms offer US stocks only, so make sure to select a platform that offers ASX-listed stocks.

Choose from the dozens available for Australian investors. Compare the features and fees from the plethora of trading platforms available for Australian investors.

Looking for a low-cost online broker to invest in the stock market? Compare share trading platforms to start investing in stocks and ETFs.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.

Get more from Finder

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and 6. Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site