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.

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