Afterpay (ASX:APT) share price slumps after PayPal's latest acquisition

Shares in the buy now, pay later company are sliding on Thursday. Here's why.

| More on:
Older businessman sits slumped with head down and hands on either side of his head.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Afterpay Ltd (ASX: APT) share price has slipped to a 1-month low on Thursday, down 2.73% to $127.04.

This comes after rival PayPal Holdings (NASDAQ: PYPL) announced the acquisition of a Japanese company.

Buy now, pay later M&A continues to intensify

PayPal has once again headlined the buy now, pay later (BNPL) industry following its US$2.7 billion Japan acquisition.

According to CNBC, PayPal said it would acquire Japanese BNPL firm Paidy. The transaction is expected to close in the fourth quarter of 2021, paid mostly in cash.

"The acquisition will expand PayPal's capabilities, distribution, and relevance in the domestic payments market in Japan, the third-largest e-commerce market in the world, complementing the company's existing cross-border e-commerce business in the country," said PayPal.

What else is dragging the Afterpay share price?

Square slides on Wednesday night

The Afterpay share price has largely tracked the performance of Square Inc (NASDAQ: SQ) following the takeover offer on 2 August.

Under the terms of the takeover, Square plans to acquire Afterpay for approximately US$29 billion worth of stock.

Afterpay shareholders will receive a fixed exchange ratio of 0.375 shares in Square Class A common stock for each Afterpay share they hold on the record date.

On Wednesday night, the Square share price tumbled 4.18% to US$254.72. At the fixed exchange ratio, this equates to US$95.52 (A$129.88).

Broader market weakness

The Afterpay share price might also be pressured by the broad-based selling taking place across the market on Thursday.

The S&P/ASX 200 Index (ASX: XJO) has tumbled 1% to 7,436, headlined by losses across resources, information technology, industrials, and communication services.

To add further insult to injury, the S&P/ASX Information Technology (INDEXASX: XIJ) index is one of the worst-performing sectors today, down 1.54%.

Major ASX-listed BNPL shares Zip Co Ltd (ASX: Z1P) and Sezzle Inc (ASX: SZL) are both in negative territory, down 0.29% and 0.76% respectively.

Afterpay share price snapshot

The Afterpay share price has had a relatively flat year-to-date performance, up around 7%. It has also gained more than 70% over the past 12 months.

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, PayPal Holdings, and Square. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Fallers

Disappointed man with his head on his hand looking at a falling share price his a laptop.
Share Fallers

Why APA, Flight Centre, Reece, and Transurban shares are falling today

These shares are having a tough finish to the week. But why?

Read more »

Frustrated and shocked business woman reading bad news online from phone.
Share Fallers

Why Bannerman Energy, Life360, Strike Energy, and Xero shares are tumbling today

These shares are under pressure on Thursday. But why?

Read more »

Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.
Share Fallers

Why DroneShield, Neuren, Paradigm, and Pilbara Minerals shares are roaring higher today

These shares are having a strong session on Thursday. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Betr, Develop Global, Northern Star, and Paragon Care shares are dropping today

These shares are having a tough time on hump day. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why APA, DroneShield, EOS, and Woodside shares are tumbling today

These shares are missing out on the good times on Tuesday.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Adairs, ANZ, Aurelia Metals, and Pilbara Minerals shares are falling today

These shares are having a tough start to the week in the red. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why ANZ, Clarity, IGO, and Pilbara Minerals shares are dropping today

These shares are ending the week in the red. But why?

Read more »

Three guys in shirts and ties give the thumbs down.
Share Fallers

Why Aurelia Metals, Centuria Office, Meeka Metals, and Resolute shares are tumbling today

These shares are having a tough time on Thursday. Let's find out why.

Read more »