Square slumps 5%. How could this impact the Afterpay (ASX:APT) share price today?

The Afterpay share price could be set for further declines on Tuesday.
The post Square slumps 5%. How could this impact the Afterpay (ASX:APT) share price today? appeared first on The Motley Fool Australia. –

The Afterpay Ltd (ASX: APT) share price could be set for another decline on Tuesday as major US indices tumble overnight.

Technology stocks tank on Wall Street

The tech-heavy Nasdaq Composite plunged 311 points or 2.14% overnight, down to a two and half month low.

It looks like a correction is well underway, with the Nasdaq down more than 7% since the beginning of September.

Perhaps more specifically for the Afterpay share price, its soon-to-be parent company Square Inc (NASDAQ: SQ) slumped 5.43% to a two and a half month low of US$226.25.

While Afterpay’s US-listed rival, Affirm Holdings Inc (NASDAQ: AFRM) also fell sharply, down 8.42%.

Headlining the sharp declines across the tech sector was a jump in bond yields.

The US 10-year Treasury yield edged higher on Monday night, reaching session highs of 1.51% and currently trading around 1.482%. It hit a two month high of 1.56% last week as investors were increasingly concerned about inflationary pressures, looming interest rate hikes and tighter monetary policy.

The richly valued tech sector has taken the brunt of the selling as investors rotate and rebalance away from high growth sectors.

What could this mean for the Afterpay share price?

Unlike conventional takeover offers that come forth with a fixed price tag, Afterpay and Square have agreed to an all-script deal which will see its shareholders receive a fixed exchange ratio of 0.375 shares of Square for each Afterpay share they hold on the record date.

This means that between now and when the transaction closes, which is expected around the first quarter of calendar year 2022, Afterpay shareholders bear the risk of a higher or lower Square share price.

After the Square share price declined 5.43% overnight to US$226.25, this gives the Afterpay share price a theoretical value of $116.36 after taking into consideration the fixed exchange ratio and current exchange rates.

The post Square slumps 5%. How could this impact the Afterpay (ASX:APT) share price today? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Afterpay right now?

Before you consider Afterpay, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Afterpay wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Why did the Afterpay (ASX:APT) share price have such a bad month in September?
ASX 200 tech shares set to slide as Nasdaq plunges 2%

These were the best performing ASX BNPL shares in September

These were the worst performing ASX 200 shares last week

Why is the Afterpay (ASX:APT) share price trailing Zip on Thursday

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Affirm Holdings, Inc., and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!