Why is the Afterpay (ASX:APT) share price falling today?

The Afterpay share price is starting the week off in the red…

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The Afterpay Ltd (ASX: APT) share price has started the week off on what some call the wrong foot. Afterpay shares have opened lower this monring, and are trading for $131.11 at the time of writing, down 0.76% for the day so far.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has started the week off on a pretty decent footing. So far this morning, the ASX 200 is up a healthy 0.73% to 7,396 points.

So why are Afterpay shares bucking the broader markets and losing steam?

Well, one possible expanation is the performance of ASX tech shares more broadly. The entire ASX tech space is in the red at the time of writing, with the S&P/ASX All Technology Index (ASX: XTX) currently down by 0.15%.

Other tech shares like Xero Limited (ASX: XRO), WiseTech Global Ltd (ASX: WTC) and Appen Ltd (ASX: APX) are also in the red today.

Afterpay share price gets Squared?

Another factor that might be in play with Afterpay today is the recent performance of the Square Inc (NYSE: SQ) share price. Why is this relevant? Well, as Afterpay investors would be well aware of, Square is the US payments company that looks set to acquire Afterpay under the scheme announed back in June.

Under this acquisition plan, Square is set to acquire Afterpay in an all-scrip deal. This will see Afterpay shareholders receive 0.375 shares of Square for every Afterpay share owned.

As such, the markets now value Afterpay shares at least partly based on what the Square share price is worth. On Friday’s trading session over in the US (Friday night, our time), the Square share price lost 1.58% and closed the session at a share price of US$262.50 a share.

That makes Square’s offer to acquire Afterpay worth roughy $135.22 a share. That’s down 1.6% or so from the ~$137.42 a share that the offer was worth after Thursday’s US trading session.

So perhaps it’s not much of a surprise that the Afterpay share price is dipping so far today.

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

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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, Appen Ltd, Square, WiseTech Global, and Xero. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, Appen Ltd, WiseTech Global, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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