It was a bumpy ride for the Afterpay Ltd (ASX: APT) share price in October as we reflect on another month that has come to pass.
Despite the ups and downs, the buy now, pay later (BNPL) company ended up more valuable than it was at the beginning of the month.
What happened to the Afterpay share price in October?
During October, there was effectively zero noteworthy news from Afterpay directly. However, there were developments in the payments space that likely influenced its valuation.
Since August, the Aussie BNPL player has been joined at the hip to its acquirer, Square Inc (NYSE: SQ). This is due to the nature of the deal involving 0.375 Square shares in exchange for 1 Afterpay share. This has created a direct link between the price of Square stock and Afterpay.
Despite this relationship, Square gained 6.4% in October while the Afterpay share price only increased 3.8%. The dislocation would suggest factors that have more of a bearing on the Australian company than its likely US-based suitor.
As we previously covered a couple of weeks ago, the Reserve Bank of Australia (RBA) published the conclusions of its review of retail payments regulation. The document outlines the suggestion for BNPL services to remove the 'no surcharge' rule. This would mean merchants could pass on the fee charged to them by the likes of Afterpay to the end customer.
Additionally, towards the end of October Westpac Banking Corp (ASX: WBC) lifted the curtain on its BNPL-esque offering. This hints at further competition being built out by the big banks in Australia.
What else?
The Afterpay share price might have received a boost throughout October as Square moved closer to its third-quarter earnings.
Investors might have been buying up shares in Square with the expectation of a favourable earnings result. These quarterly numbers will be revealed on 4 November.
Importantly, analysts have an average revenue estimate of US$4.54 billion for the quarter, which would reflect a 50% increase year on year. Meanwhile, the average estimate for earnings per share (EPS) is 39 US cents. This would be a near fivefold increase in earnings year on year.
Undoubtedly, the Afterpay share price will be in focus following Square's results.
