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Here’s why the Afterpay (ASX:APT) share price has tumbled 10%

The Afterpay Ltd (ASX: APT) share price is sinking today as the market digests a series of announcements.

At midday, the Afterpay share price had suffered a steep 10% fall to sit just below $120.

It’s worth noting that the ASX is a sea of red today, with the S&P/ASX 200 (ASX: XJO) down 2.3% at the time of writing, Zip Co Ltd (ASX: Z1P) down 5.2%, Sezzle Inc (ASX: SZL) down 12.2% and Kogan.com Ltd (ASX: KGN) down 8.6%.

Here are the key points from Afterpay’s announcements.

Convertible notes offer

Yesterday, Afterpay announced a $1.25 billion convertible notes offer, which will partly be used to increase its stake in Afterpay US.

The notes are convertible into ordinary shares and will expire in 2026.

This morning, Afterpay revealed it successfully upsized the offering to $1.5 billion and priced the notes.

The notes carry a conversion premium of 45% to Afterpay’s last closing price of $134.36, meaning that the notes will be able to be converted into ordinary shares at a price of $194.82.

Co-founder sell-down

Yesterday, the company also flagged another co-founder sell-down, with co-CEOs Anthony Eisen and Nick Molnar set to offload 450,000 shares each.

The company revealed this morning that the transaction has been completed, with the duo selling shares at $134.36, netting them a cool $60 million each. 

The pair retain around 19.5 million shares each, representing a combined ~13% of the company.

Highlights from Afterpay’s HY21 results

As expected, Afterpay’s half-yearly growth rates were off the charts:

  • Underlying sales (i.e. transaction volume) more than doubled to $9.8 billion for the half;
  • Afterpay revenue jumped 112% to $374.2 million;
  • Active customers grew by 80% to 13.1 million; and
  • Active merchants increased by 73% to 74,700.

The company also improved its gross loss metric and maintained its net transaction margin, but the net loss expanded to $79.2 million as the company stepped up its operating costs and employee expenses as it scales.

For a more detailed look at Afterpay’s results, check out this article: Afterpay share price in a trading halt, HY21 report revealed.

And for a more optimistic view of Afterpay’s growth prospects, read this: 3 highlights from Afterpay’s HY21 report.

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At the time of publishing, the author of this article owns shares in Afterpay.

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