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The Afterpay (ASX:APT) share price is up 35% this month. Here’s why

The Afterpay share price has gained 35% or so over the month of August so far…
The post The Afterpay (ASX:APT) share price is up 35% this month. Here’s why appeared first on The Motley Fool Australia. –

The Afterpay Ltd (ASX: APT) share price has certainly made its presence felt on the ASX boards over this month of August. As you may have gathered from the headline, Afterpay shares are currently up 35.9% over August so far.

This buy now, pay later (BNPL) pioneer is, of course, no stranger to delivering hefty share price gains for its investors over the past few years. As well as the occasional scare, we might add.

Afterpay is now up an impressive 77.8% over the past 12 months. And an even more astounding 4,350% over the past 5 years.

But even considering its envy-inducing track record, a near-36% jump in this company’s valuation in just 17 days is still a pretty mean feat. So what’s behind this latest leg up for investors?

Afterpay share price Squares away a bumper month so far

Afterpay investors have one company to thank for their lucrative August so far: Square Inc (NYSE: SQ). Square is the US$121 billion payments behemoth behind the game-changing takeover bid that Afterpay shareholders were offered on 2 August.

As Afterpay shareholders will probably be well aware of by now, that was when Square announced that it had lobbed a bid for a takeover of Afterpay.

Afterpay has accepted Square’s tie-up offer, to be paid for in an all-scrip deal. If this deal does go ahead, Afterpay shareholders will receive 0.375 shares of Square for every Afterpay share owned.

At the time of this announcement, that valued Afterpay at approximately $126.21 a share.

So it’s no surprise we have subsequently seen Afterpay shares rapidly climb towards that level. On the most recent Square stock price (US$263.40), the offer is now worth just over $135 a share for Afterpay.

If the deal gets through the final approval hurdles, the two companies expect the tie-up to be finalised by the first quarter of the 2022 calendar year.

Until then, barring any unforeseen developments, the Afterpay share price will be deeply dependent on what happens with the Square share price. So, make sure to keep an eye on both going forward if you’re an Afterpay investor or enthusiast.

At Afterpay’s current share price, the company has a market capitalisation of $38 billion.

The post The Afterpay (ASX:APT) share price is up 35% this month. Here’s why 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

7 traps to avoid right now when buying ASX shares

One massive reason for keeping Afterpay (ASX:APT) shares
Afterpay (ASX:APT) shares could still receive a rival bid: analysts
With a dual listing, Square could boot CBA (ASX:CBA) from the ASX 200 top spot
ASX 200 Weekly Wrap: New records just keep coming for the ASX 200

Motley Fool contributor Sebastian Bowen owns shares of Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO 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.

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