The Afterpay Ltd (ASX: APT) share price has been a remarkable performer in recent times. In fact, 'diamond hands' shareholders have been rewarded with a gargantuan 900% rally since the crash of March 2020.
However, the rapid ascension turned into a volatile rollercoaster this year. On a year-to-date basis, the Afterpay share price is 6.3% above its 2021 starting position. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has gained 10.8% over the same period, outperforming the high-flying buy now pay later (BNPL) company.
Now that Afterpay is expected to hitch a ride with US-based payments giant Square Inc (NYSE: SQ), two investing experts have shared their thoughts on whether Afterpay is worth a spot in the portfolio.
Validation a good sign for Afterpay shares
It has been a market darling for much of its existence since its initial public offering (IPO) in 2017. In the space of four short years, Afterpay has delivered 4,187% in returns to investors. That works out to be a compound annual growth rate (CAGR) of 142.1%.
Now that it looks set to be acquired by Square, two experts have weighed in on whether Afterpay shares are still desirable at their current price. These experienced investors are Chris Stott from 1851 Capital and James Gerrish from Market Matters.
Firstly, Mr Stott pointed out the commendable leadership from Nick Molnar and Anthony Eisen, acknowledging the achievement of securing a deal with Square. Additionally, Stott considered Afterpay shares to be a hold at the moment, stating:
We would say people should hold, and then roll into the Square offer. Hold the Square shares if you can. We think certainly with them as a partner now that they've got significant capital fire-power behind them to really drive their next level of growth over the medium to longer term.
Building on this, Mr Gerrish also rated Afterpay shares a hold at this stage. Furthermore, the portfolio manager highlighted recent events that serve as validation for the BNPL sector. For instance, Amazon.com, Inc. (NASDAQ: AMZN) partnering with US-based BNPL company Affirm Holdings Inc (NASDAQ: AFRM) to offer payment instalments to the e-commerce giant's checkout.
While Gerrish remained positive on Afterpay shares, he shared his view that Zip Co Ltd (ASX: Z1P) could have more upside in the short term.
Integrations galore
As Gerrish points out, the next year will involve plenty of integration between Afterpay and Square. One such integration involves Square's iconic 'Cash App'.
According to a release, Afterpay consumers will be able to manage their instalments and repayments directly within the Cash App. This will open the door to roughly 10 million monthly active users of Square's app for Afterpay.
