Afterpay shares drop: Morgan Stanley trims stake, UBS retains Sell

Afterpay dips, Morgan Stanley lowers its exposure, and UBS remains unconvinced.

Afterpay share price dips from recent highs

The Afterpay (APT) roller coaster has continued on Wednesday, with the buy now pay later (BNPL) heavyweight’s share price dropping 6% in the first hour of trade.

This comes after the company has witnessed a monumental short-term share price run up: with the Afterpay share price rising 69% in the last month and 9% in the last five days.

At the time of writing Afterpay still traded close to its all-time highs, at $46.15 per share.

Morgan Stanley reduces its exposure

From an institutional perspective, blue-chip investment bank Morgan Stanley (MS) today revealed that it had further trimmed its still substantial stake in Afterpay.

Looking at how this has played out over the last couple of months: by March, MS had built a sizeable stake in the BNPL leader, owning 29,787,503 or 11.20% of APT's outstanding ordinary shares. MS has slowly been reducing its exposure since March, however. Indeed, by 6 April MS had reduced its stake in APT to 9.7%, on 11 May to 8.2% and today MS revealed that it had reduced its stake down to 7.12%.

At those levels, Morgan Stanley currently owns 21,896,173 ordinary Afterpay shares.

UBS remains unconvinced

Elsewhere, UBS this week – a long-focused APT bear – actually raised their price target on the BNPL darling, in response to the company’s recently announced 5 million US subscriber milestone. Here UBS bumped up their 12-month price target to $14.00 per share (from 13.00) though stuck to their Sell rating.

Though the investment bank notes that APT has been a benefactor of positive online sales trends, UBS remains cautious, saying:

‘While we think COVID-19 could accelerate positive structural changes for APT, we are cautious to extrapolate the magnitude of recent growth in online's share given the recent forced closures of shops.’

As a corollary to the impressive US customer growth APT has experienced during the coronavirus pandemic, UBS interestingly noted that ‘we assume that APT's credit decisioning system is performing well; we therefore lower the magnitude of our bad debt forecasts for FY21.’

Platitudes aside, UBS continues to stand out as the bear amongst a community of analysts who generally are infatuated by Afterpay’s growth prospects. Bell Potter for example, recently raised their price target on APT to $51.50 per share.

How to trade Afterpay

Are you bullish or bearish on Afterpay? Trade accordingly. You can use CFDs to trade Afterpay and other growth stocks – LONG or SHORT through IG’s world-class trading platform now.

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

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

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.