The S&P/ASX 200 Index (ASX: XJO) has welcomed its latest addition this morning. At 11am AEST, the Block, Inc. (ASX: SQ2) share price started to trade on the Australian share market on a deferred settlement basis.
This follows the completion of its takeover of Afterpay Ltd (ASX: APT) and the removal of the buy now pay later provider's shares from the ASX boards at the close of play on Wednesday.
The Block share price is currently trading at $176.28. This follows a morning peak of $178.88 and a low of $176.08.
How is the new Block share price decided?
The new SQ2 CDIs on the ASX represent shares of Square Class A common stock at a ratio of 1 for 1.
This means that they are worth the same as the NYSE-listed Block shares, adjusted for current exchange rates.
This isn't a new phenomenon. ResMed Inc (ASX: RMD) shares have traded as CDIs on the Australian share market for years, though they have a different ratio.
Overnight the Block share price in New York closed at US$128.14. This equates to $177.50 at current exchange rates, which means its ASX listed shares are trading at a slight discount to their US equivalents. But this is largely to be expected given exchange rate risks and Block's ongoing slide.
Is this a buying opportunity?
The team at BTIG research in the United States appear to see this as a buying opportunity.
It currently has a buy rating and very ambitious US$320 price target on Block's US shares. This equates to a price target of $442 for its ASX listed shares, which implies more than 135% upside over the next 12 months.
Time will tell if it gets there.
