Afterpay share price: what drove the 4.44% rebound today
We examine the catalyst behind Afterpay’s impressive share price rebound today, January 2.
The regulatory question
It’s interesting how the exact same piece of information can drive dramatically different outcomes.
For instance, when news began to circulate the market that Sezzle (ASX: SZL) had had its application for a lending license in California denied by the Department of Business (DBO), the subsequent market reaction was severe: the Sezzle share price collapsed by as much as 18% as investors headed for the exits.
Of course, Sezzle’s own decline raised other questions, fuelled primarily by ambiguous language in the DBO’s media release on the matter.
Here, California’s Department of Business wrote:
‘In a parallel action, the DBO issued a legal opinion advising a second, unnamed lender that its point of-sale products also meet the Civil Code and case law definition of “loans” and require a CFL license.’
Some on social media speculated that Afterpay (ASX: APT) was the ‘second unnamed lender’ in question. Others theorised it was Quadpay, a New York based, buy now pay later provider.
Yet Afterpay and its ever-strong public relations team were quick to rebut such theorising.
By 10:18 AEDT the Afterpay team released a media statement confirming:
'That an Afterpay subsidiary applied for a California finance lender's license through the DBO in 2019. The DBO issued the license on 12 November 2019 and the license is valid.’
Reiterating their regulator-friendly approach to doing business, Afterpay further noted that the company:
'Regularly engages in dialogue with federal and state regulators in the US, including the DBO, to ensure that regulators understand Afterpay's products and the Company's commitment to consumer protection and compliance with applicable laws.'
The unnamed lender has yet to be found.
Afterpay share price gains ground
As the ASX 200 proved volatile, the Afterpay (ASX: APT) share price looks to have rallied off the back of this news, gaining as much as 4.82% by the afternoon session.
Interestingly, as Afterpay’s own media release notes, this is not really new news.
As the regulatory filing shows: Afterpay was granted a California Financial Lender (Main) – Lender and Broker License – to Afterpay US Services, LLC on November 12, 2019. The license status, is indeed active.
Sometimes I guess, it’s hard for markets to be fully efficient.
The Afterpay (ASX: APT) share price finished out today’s session at $30.630 per share.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get commission from just 0.08% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets