The Afterpay Ltd (ASX: APT) share price is pushing higher at long last on Tuesday.
In afternoon trade, the buy now pay later provider's shares are up 1.5% to $73.32.
However, this is little consolation to longer term shareholders who have seen the Afterpay share price tumble in recent months.
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What's happened to the Afterpay share price in recent months?
In August, Afterpay and Block (previously named Square) agreed an all-scrip deal which will see Afterpay shareholders receive a fixed exchange ratio of 0.375 shares of Block Class A common stock for each Afterpay share they hold.
At the time of the deal, the Block share price was trading at US$247.26. This implied a transaction price of approximately $126.21 per Afterpay share, which valued the deal at approximately US$29 billion or $39 billion.
However, as this deal is an all-scrip one, the value of the transaction rises and falls with the Block share price. But unfortunately, since the deal was announced, the Block share price has fallen time and time again.
In fact, the Block share price closed Monday night's session at US$144.48, down almost 42% since making its proposal. This has unsurprisingly weighed heavily on the Afterpay share price, which has been dragged 42% lower than the original implied transaction price of $126.21. This values the transaction at under $23 billion, down from the original $39 billion.
What now?
Investors that have watched the Afterpay share price tumble in recent months may now be wondering whether to hold onto their shares when they convert into Block shares in the coming weeks when the takeover completes.
One fund manager that isn't tempted is Atlas Funds Management. This is because it isn't confident that its shares (or the ASX listed Block shares) will rebound in 2022 due largely to the lofty multiples that the Block share price trades on.
It commented: "After agreeing to a takeover in mid-2021, Afterpay's share price is tethered to Block's (née Square) share price in the NYSE. As we have no unique insight into Square's global merchant payments activities and are alarmed at its price-earnings ratio of 156x, it is tough to pick Afterpay as the sharp recovery candidate in 2022."
