The Afterpay Ltd (ASX: APT) share price is underperforming the broader market on Friday.
At the time of writing, shares in the buy now, pay later company are swapping hands for $130.53, down 2.9%.
Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is getting a boost, charging 0.5% higher. As a result, Afterpay shareholders might be wondering what is to blame for today's weakness.
Attached at the hip
Since announcing the deal which is expected to see Afterpay be acquired by Square, the Afterpay share price has been tied to its acquirer's share price. This is a consequence of the all-scrip offering, which would see shareholders receive 0.375 Square shares for each share in the Aussie BNPL player.
As a result, the market now tends to value the Australian company's shares proportionally to Square. This can be a blessing or a curse, depending on the day. Unfortunately for Afterpay shareholders, Square weakened overnight in the United States.
Interestingly, the market is selling off Afterpay more than its acquiring company slipped last night. Specifically, US investors pushed the Square stock price down 0.86% overnight. Meanwhile, Afterpay has fallen significantly more — indicating some level of disconnect.
What could be weighing on the Afterpay share price?
There's a developing story today that could be weighing on Afterpay. Firstly, it is no secret that the instalment provider is planning to delve into banking services. In short, the company is expected to launch 'Afterpay Money' in October, which will offer a savings account and a debit card.
Keeping all that in mind, shareholders might be getting nervous as two tech behemoths reveal their plans to expand further into payments.
Today we started rolling out Facebook Pay as a payment option outside of our apps, giving businesses another easy and secure payment method for their websites. Expect to see it soon in more online stores – starting with @Shopify merchants in
— David Marcus (@davidmarcus) September 1, 2021pic.twitter.com/GbAk0eLvoA
Facebook has announced its launch of Facebook Pay in Australia. This product from the social media giant will allow users to add a bank card and pay merchants or other people through Instagram and other Facebook apps. While the website doesn't indicate that the payment method will offer instalments, the entry of a trillion dollar company might have some shareholders unsettled.
This development follows recent news of Amazon.com, Inc. (NASDAQ: AMZN) partnering with US-based BNPL provider Affirm Inc (NASDAQ: AFRM) to introduce instalment payments to the largest eCommerce company on the planet.
All in all, the Afterpay share price appears to be reacting to the potential of fierce competitors.
