Afterpay share price sinks 7.5%: Is this a buying opportunity? – Motley Fool Australia

The Afterpay Ltd(ASX: APT) share price is having a rare off day and is sinking notably lower on Tuesday.
The payments company’s shares are the worst performers on the S&P/ASX 200 Index (ASX: XJO) this afternoon with a 7.5% decline to $66.30.
Why is the Afterpay share price sinking lower?
Today’s decline appears to be due to profit taking in the technology sector following a similar move overnight on Wall Street’s technology-focused Nasdaq index.
The likes of Appen Ltd(ASX: APX), Xero Limited(ASX: XRO), and Zip Co Ltd(ASX: Z1P) are all falling heavily as well.
Overnight the Nasdaq index was up as much as 1.9% before ending the day 2.1% lower. Investors appear to have decided to take profit off the table shortly after the index broke through the 11,000 points mark for the first time.
And given the meteoric rise in the Afterpay share price over the last few months, I can’t say it is a surprise to see it fall more than most.
Even after today’s sizeable decline, the Afterpay share price is up a whopping 720% from its March low of $8.01.
Is it time to buy Afterpay shares?
Two brokers that are likely to see this share price weakness as a buying opportunity are Ord Minnett and Morgan Stanley.
Last week Ord Minnett placed a buy rating and $76.70 price target on the buy now pay later provider’s shares. This price target implies potential upside of 15.5% for its shares over the next 12 months.
Morgan Stanley is even more bullish and upgraded Afterpay’s shares to an overweight rating with a massive $101.00 price target.
If the company’s shares were to reach that lofty price target, it would mean a gain of just over 52%.
I would agree with these brokers and believe the weakness in the Afterpay share price could be an opportunity to invest. This is because I feel the company is well on its way to becoming a real force in the payments industry and capable of growing materially over the next decade.
Though, given the premium that its shares trade at, it might be best to restrict an investment to just a small part of your portfolio.
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