The S&P/ASX 200 Index (ASX: XJO) has had a rather shaky start to this Wednesday’s trading day so far. At the time of writing, the ASX 200 is down by 0.75% at 7,365 points after stints on both positive and negative territory this morning. But one ASX 200 share that is defying this volatility is the Afterpay Ltd (ASX: APT) share price.
Afterpay shares are currently up a healthy 2.17% so far today, trading at $120 a share. That’s obviously a clear and enthusiastic outperformance of the broader market. So what’s getting investors all riled up over Afterpay shares today?
Afterpay share price on the climb
Well, one possible explanation could be the 2021 annual general meeting addresses and presentation that was released to the markets this morning. In this update, Afterpay’s management went over the growth numbers that the company delivered back in August for FY2021.
But they also discussed the impending merger with the US payments giant Square Inc (NYSE: SQ). As most investors (and hopefully all Afterpay shareholders) would know by now, back in August, Afterpay announced that it would be acquired by Square in a monster all-scrip deal.
Afterpay shareholders look set to receive 0.375 shares of Square for every share of Afterpay held if the deal goes through. This, the company says, should be completed by “the first quarter of 2022”.
But, one thing still stands in the way of this deal. Afterpay shareholders have to vote and approve the takeover. Square shareholders have already done so, enthusiastically endorsing the marriage earlier this month.
Square merger, Afterpay Ads dominate AGM
But Afterpay shareholders will need to give the green light when the company holds an extraordinary general meeting next month.
Here’s some of what Afterpay co-CEO Nick Molnar had to say:
As we look ahead to the Afterpay EGM and shareholder vote in a few weeks’ time, I cannot emphasise enough that the combination of what Afterpay has built, together with Square’s extensive customer and merchant base, is something that will supercharge our business and team 10 times over…
We believe that the combination with Square is the most compelling next step for our teams and our business. I look forward to speaking about this with shareholders in further detail in early December.
Mr Molnar also expanded on Afterpay’s growth plans for its new ‘Afterpay Advertising’ initiative. Molnar stated that “demand for Afterpay ads in the US has certainly exceeded our initial expectations”. He cited early results that show a “lift of 20% in sales, on average, when brands choose to promote their products using Afterpay ads”.
Molnar added that “we’re going to continue to invest in these attributes during FY22”, which will involve a potential rollout to “other regions in the second half of FY22”.
Well, the markets have certainly liked what Afterpay’s management had to say today, judging by the healthy lift we have seen in the Afterpay share price so far. At the latest price (at the time of writing) of $120.01, Afterpay has a market capitalisation of $34.07 billion.