The share prices of Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) are down 8% and 7% respectively. Is it time to panic?
What’s happening?
It’s a sea of red in the buy now, pay later (BNPL) sector right now.
Not only are Afterpay and Zip shares down, but others in the industry are also down heavily. For example, the Sezzle Inc (ASX: SZL) share price is down around 8%, the Splitit Ltd (ASX: SPT) share price is down 2%, the Openpay Group Ltd (ASX: OPY) share price is down 5%, the Laybuy Holdings Ltd (ASX: LBY) share price is down 2.9% and the Humm Group Ltd (ASX: HUM) share price has dropped 1.5%. And so on.
It’s a pretty interesting reaction considering the S&P/ASX 200 (ASX: XJO) is up 0.2%.
But it’s not just the BNPL industry that is suffering right now. Plenty of other ASX growth shares are being sold off.
The Xero Limited (ASX: XRO) share price is down almost 4%, the Altium Limited (ASX: ALU) share price is down around 2%, the WiseTech Global Ltd (ASX: WTC) share price is down 4.4%.
A lot of businesses that are generating growth are currently being sold off.
Why are they being sold off?
Well there are a number of different reasons that people might point to. The expectation that interest rates might rise early than expected is something that is being mentioned quite a bit at the moment. Interest rates can have an important effect on asset values. If interest rates go higher, it should theoretically lower asset values a bit.
But unless you’re a day trader, don’t worry just yet, many share prices are still a lot higher than they were six months ago and 12 months ago. For example, the Afterpay share price is still up 65% over the last six months despite this hefty decrease today. Perhaps some investors are simply taking profit off the table.
Share prices are meant to move up and down. If you invested for the long term in a business then a 8% decline – or 8% increase – shouldn’t be enough to change your thoughts about a business if invested with the right thesis and intentions at the start.
Some investors may be able to find some opportunities amongst this sell off.
Before you consider Afterpay, you can click on this link to ASX growth shares and find lots of ASX stock ideas and analysis.
