The Afterpay (ASX:APT) share price is up 35% this month. Here's why

The Afterpay share price has gained 35% or so over the month of August so far…

| More on:
A happy woman carrying colourful bags descends and escalator after a successful shopping spree

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Afterpay Ltd (ASX: APT) share price has certainly made its presence felt on the ASX boards over this month of August. As you may have gathered from the headline, Afterpay shares are currently up 35.9% over August so far.

This buy now, pay later (BNPL) pioneer is, of course, no stranger to delivering hefty share price gains for its investors over the past few years. As well as the occasional scare, we might add.

Afterpay is now up an impressive 77.8% over the past 12 months. And an even more astounding 4,350% over the past 5 years.

But even considering its envy-inducing track record, a near-36% jump in this company's valuation in just 17 days is still a pretty mean feat. So what's behind this latest leg up for investors?

Afterpay share price Squares away a bumper month so far

Afterpay investors have one company to thank for their lucrative August so far: Square Inc (NYSE: SQ). Square is the US$121 billion payments behemoth behind the game-changing takeover bid that Afterpay shareholders were offered on 2 August.

As Afterpay shareholders will probably be well aware of by now, that was when Square announced that it had lobbed a bid for a takeover of Afterpay.

Afterpay has accepted Square's tie-up offer, to be paid for in an all-scrip deal. If this deal does go ahead, Afterpay shareholders will receive 0.375 shares of Square for every Afterpay share owned.

At the time of this announcement, that valued Afterpay at approximately $126.21 a share.

So it's no surprise we have subsequently seen Afterpay shares rapidly climb towards that level. On the most recent Square stock price (US$263.40), the offer is now worth just over $135 a share for Afterpay.

If the deal gets through the final approval hurdles, the two companies expect the tie-up to be finalised by the first quarter of the 2022 calendar year.

Until then, barring any unforeseen developments, the Afterpay share price will be deeply dependent on what happens with the Square share price. So, make sure to keep an eye on both going forward if you're an Afterpay investor or enthusiast.

At Afterpay's current share price, the company has a market capitalisation of $38 billion.

Motley Fool contributor Sebastian Bowen owns shares of Square. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A woman with a broad smile on her face holds up ten fingers.
Share Market News

Here are the top 10 ASX 200 shares today

It was another happy day for most ASX 200 shares this Wednesday.

Read more »

Two CEOs shaking hands on a deal.
Mergers & Acquisitions

Wesfarmers share price rises amid latest acquisition news

The company has completed its latest acquisition.

Read more »

a woman holds a facebook like thumbs up sign high above her head. She has a very happy smile on her face.
Broker Notes

Why Bell Potter just upgraded this ASX 200 share to a buy rating

This share is exposed to structural growth tailwinds according to its analysts.

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A male doctor wearing a white doctor's coat shrugs and holds his hands up to indicate the unimpressive CSL share price as a result of OOVID-19
Share Market News

Here's why you might have just bought Healius shares

Two of the most popular super funds just loaded up on this healthcare stock.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer

These 2 ASX 200 shares just hit 52-week lows: I rate them as buys

These two stocks look too cheap to miss!

Read more »

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.
Share Fallers

Why Core Lithium, Deep Yellow, EML, and Wildcat shares are falling today

These ASX shares are having a tough time on Wednesday. But why?

Read more »

A young woman wearing overalls and a yellow t-shirt kicks one leg in the air showing excitement over the latest ASX 200 shares to hit 52-week highs
Share Gainers

Why Evolution, Fisher & Paykel, IDP Education, and Temple & Webster shares are jumping

These ASX shares are having a strong session on hump day. But why?

Read more »