The S&P/ASX 200 Index (ASX: XJO) is having a pretty dreary hump day so far this Wednesday. At the time of writing, the ASX 200 is down by 0.25% after initially rising this morning. And that is making the Afterpay Ltd (ASX: APT) share price look especially pleasing today.
Afterpay shares are currently up a very healthy 5.3% at $87.38 each after closing at $82.89 yesterday and opening at $88 this morning. So why is this buy now, pay later (BNPL) pioneer faring so well compared to the broader market?
Well, the first thing to note is that it has been a rough period for Afterpay shares lately. Only yesterday, the company hit a new 52-week low of $80.20 a share, the lowest pricing Afterpay has seen since October 2020. It's possible that today's gains are a result of investors trying to 'find a bottom' for Afterpay shares.
Afterpay share price bounces off 52-week low
But we also can't look past the overnight performance of Block Inc (NYSE: SQ). Block, or Square, as it used to be known, is currently in the process of acquiring Afterpay in full. Back in August, both companies announced the pending nuptials, with Afterpay shareholders set to receive 0.375 shares of Block for every Afterpay share held in an all-scrip deal. Since the offer amount is set at a fixed ratio of block shares, this inherently tied the Afterpay share price to that of Block.
Well, surprise, surprise, the Block share price also had a strong night overnight on the US markets. The payments giant was up a very pleasing 7.7% overnight to US$170.47 a share. This comes after Block hit a new 52-week low of its own this week (US$157.57).
With Block shares rising 7.7% overnight, this also means that the takeover offer on the table for Afterpay just increased by 7.7% in value as well. So this is the likely reason why we are seeing such a strong rise in the Afterepay share price today.
But it probably wouldn't be hurting that ASX tech shares across the board are also in the green today. The S&P/ASX All Technology Index (ASX: XTX) is currently up by 1.2%. And other major ASX tech shares like Xero Limited (ASX: XRO) and WiseTech Global Ltd (ASX: WTC) are also enjoying strong days.
At the current Afterpay share price, this ASX 200 BNPL share has a market capitalisation of $25.37 billion.
