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

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

| More on:
woman paying using paypal

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 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.

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.

More on BNPL shares

A happy girl in a yellow playsuit with a zip gives the thumbs up
Share Gainers

If I'd put $5,000 into Zip shares on 9 October, here's what I'd have now!

The stars have been aligning for Zip shares.

Read more »

woman using affirm to pay
BNPL shares

Up 288% in 6 months, Zip share price tipped for more outsized gains

Zip shares have rocketed 288% in just six months.

Read more »

A businessman stacks building blocks.
BNPL shares

Up 93% since October, why are Block shares marching ahead again on Friday?

ASX 200 investors have been snapping up Block shares.

Read more »

A man wearing glasses and a white t-shirt pumps his fists in the air looking excited and happy about the rising OBX share price
BNPL shares

Zip share price up 58% in 7 trading days! What's going on?

This BNPL provider has been on fire recently. But why?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
BNPL shares

Shares sold: Why Zip is under fire from its own shareholders

Some Zip investors had their shares sold without their knowledge.

Read more »

Sad woman with her hand on her head and holding a credit card.
BNPL shares

Zip share price tumbles 9% despite explosive first-half growth

Zip had a strong half and delivered a big improvement in key metrics.

Read more »

A businesswoman angrily throws her papers into the air.
Earnings Results

How is the Block share price rocketing 17% on Friday?

ASX 200 investors are sending the Block share price flying higher today.

Read more »

woman using affirm to pay
Mergers & Acquisitions

Zip share price rises as investors buy now on takeover talk

Investors are buying now on rumours of a takeover payoff later.

Read more »