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Afterpay share price rises as key players trim their positions

As Afterpay continues to trade higher, we look as some of the recent pieces of news and analysis concerning the much-hyped stock.

The Afterpay (APT) share price hit an intraday high of $21.81 a little after the open today. Yesterday the stock rallied 2.9%.

Such moves take the company well from its mid-March lows, where APT at one point traded below $10 per share.

Of course, there’s no denying that some of the shine has come off the market darling in recent times – even framed against this impressive rebound – as investors and analysts justifiably fret over everything from credit issues, slowing revenue growth and net transaction margins.

And though investors still seem to believe in the beloved cult stock, a number of key analysts have readjusted their ratings or otherwise been vindicated by their bearish views.

In March Citibank slashed its price target on APT by some 50%, UBS remained the ever-focused bear amongst the pack, and Morgan Stanley recently lowered its rating from Overweight to Equal-weight.

Afterpay share price: the lifestyle behemoth

Even with all that going on, Afterpay continues to diligently expand its offerings and reach, last week revealing that its long-awaited eBay partnership had gone live.

In fact, even though Morgan Stanley pegs Afterpay’s fair value at ‘just’ $19.00 per share – a price target which implies a shade of downside from current levels – the investment bank thinks there’s a lot to like about this new partnership. Centrally, not only will this deal give APT access to some 40,000 Australian SMEs but it will help the young company diversify its retail exposure.

Historically, APT has been heavily skewed towards fashion and beauty.

More generally, Morgan Stanley recently said:

‘We see upside risk to March quarter revenues with strong app downloads, online tailwinds and we are +10% vs. consensus,’ while noting that ‘it's too early for credit concerns to emerge, though APT could take an overlay charge. We think the litmus test will be in June or more likely September quarter.’

Watch this space.

Banks lower the stakes

Resembling a shell game of sorts, Morgan Stanley (MS) and Mitsubishi UFJ Financial Group (MUFG) yesterday updated their substantial holdings forms – as they relate to Afterpay Limited.

This marks the tenth substantial holding form update from both firms in the last three weeks.

Firstly, MUFG noted that they had reduced their Afterpay holdings to 31,286,276 fully paid ordinary shares – giving the company an 11.76% voting interest.

MUFG previously held 35,298,543 fully paid ordinary APT shares.

Secondly, Morgan Stanley revealed that it had also lowered its APT holdings to 25,793,024 fully paid ordinary shares – giving the investment bank a 9.70% voting interest.

MS previously held 29,787,503 fully paid ordinary APT shares.

How to trade Afterpay: long or short

What do you make of Afterpay’s recent rebound: can it last or will it be short lived? Regardless of your view, you can trade Afterpay and other BNPL stocks such as Zip, Splitit and Sezzle – long or short – using IG’s world-class trading platform now.

For example, to buy (long) or sell (short) Afterpay using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘APT’ or ‘Afterpay’ in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

The information 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 Bank S.A. 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 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. See full non-independent research disclaimer.

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