All eyes on Square Inc, Afterplay Ltd after US$29 billion deal

Summary

• Square Inc (NYSE SQ) to buy Afterpay Ltd (ASX:APT) for US$29 billion.
• The Square stock surged by 8.16% to US$268 at 9.47 am ET on August 2.
• Afterpay stock price went up from AS$10 in 2020 to AS$126.26 in 2021.

The Square, Inc. (NYSE:SQ) stock was trending on Wall Street and Google and other sites on Monday, a day after it revealed plans to acquire the Australian buy now pay later (BNPL) services company Afterpay Ltd. (ASX:APT) for US$29 billion.

Square expects to capitalize on Afterpay's online payment business after acquiring the company. The SQ stock surged 8.16% to US$268 at 9.47 am ET on Tuesday following the announcement. The deal value decided based on SQ's July 30 stock closing price will likely be completed by Q1 of 2022.

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Source: Pixabay.

Afterpay has grown exponentially during the pandemic as home-stuck people turned to online shopping. The company provides service to over 16 million consumers and over 1,00,00 merchants across the globe. Its stock price soared from AS$10 in 2020 to AS$126.26 in 2021.

In April, Square, the payment platform of Twitter Inc (Nasdaq:TWTR), had bought a majority stake in Tidal, an international music and entertainment company.

Jack Dorsey, the co-founder of Square Inc, said, "Both the companies (Afterpay and Square) have a common purpose and that is to make financial systems fair, accessible, and inclusive. Together we will deliver compelling products and services for consumers and merchants.”

The market cap of SQ is US$112.5 billion. The P/E ratio of the fintech company is 348.25 and the forward P/E one year is 504.61. the earnings per share (EPS) is US$0.70.

The highest and lowest price of the SQ stock for the last 52 weeks is US$283.19 and US$127.36, respectively. The share volume is 7,566,513. Its stock value rose by 13.61 percent YTD.

In the recently releasled earnings report for the second quarter, SQ reported a gross profit of US$1.4 billion, up 91 percent YoY. In addition, its flagship product CashApp netted a gross profit of US$546 million. As a result, total revenue for the period was US$4.68 billion, an increase of 143 percent YoY.

The net income of SQ was US$204 million, or US$0.40 per diluted share, in the quarter. Adjusted EBITDA was US$360 million compared to US$98 million of Q2, 2020.

The company had US$6.6 billion in cash, cash equivalents, and investments.

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The stock value of APT went down by 2.71 percent YTD. The total revenue of APT in the last six months of 2020 was AS$417.2 million. The net loss during the period was AS$76.5. Its market cap of is AS$32.74 billion.

Please note: The above constitutes a preliminary view, and any interest in stocks/cryptocurrencies should be evaluated further from an investment point of view.