Fintechs led by Afterpay got beaten up on news of a Senate inquiry
Shares in Afterpay, the buy-now-pay-later ASX-listed fintech, bombed on Wednesday afternoon after it was swept up in a Senate inquiry into financial services not covered by the banking royal commission.
The company’s stock (ASX:APT) closed at $11.35, down 19%.
It fell by as much as 23% after the Sydney Morning Herald reported on the inquiry at around 3pm AEST.
Trading volumes in Afterpay shares exploded after the SMH published its article, with 7.4 million shares changing hands compared to a regular day of around 2 million.
Afterpay last month closed an oversubscribed equity raise for $25 million at $16.96 a share.
At its Wednesday closing price of $11.35, Afterpay has a market capitalisation of $2.45 billion.
That’s less than half of the value it reached on August 24, when shares in the company hit a record intra-day high of $23.
Other listed companies who operate similar lending models were also hit hard.
Afterpay rival Zip Co (ASX:Z1P) fell more than 12% to 93c, while debt collection companyCredit Corp finished 9% lower at $18.85.
And non-bank lender Money3 Corp (ASX:MNY), which offers fast-cash and personal loans up to the value of $8,000, fell by almost 14% to $1.70.
The Senate inquiry is expected to look at payday lenders, consumer leasing businesses, and companies such as Afterpay offering consumer finance for retail spending.
The inquiry is being put up by the Labor Opposition, and is supported by the Greens and key crossbenchers whose numbers will ensure it will get through the Senate.
The corporate regulator ASIC also is looking at buy now pay later industry lenders such as Afterpay and Zip Co, and whether new regulations are needed to protect costumers.