The Afterpay Ltd (ASX: APT) share price has failed to build on Wednesday's gains.
In afternoon trade, the buy now pay later (BNPL) provider's shares are down 1.5% to $75.80.
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Why is the Afterpay share price falling?
The Afterpay share price is under pressure today following a pullback in the Block (previously named Square) share price overnight.
Yesterday Block received the final approval required to implement its takeover of Afterpay. This means that in a matter of days the Afterpay share price will no longer exist and will instead be absorbed into the payment giant.
The combined company will then have a secondary listing on the Australian share market under the SQ2 ticker code. It is due to commence trade on the ASX on 20 January on a deferred settlement basis before trading normally from 2 February.
Should you buy Afterpay shares before they convert to SQ2 shares?
One leading broker that appears to believe that investors should buy Afterpay shares now is Macquarie Group Ltd (ASX: MQG).
The note, courtesy of the Australian, reveals that its analysts feel there's a buying opportunity here for investors. This is due to their belief that the Square share price is undervalued at the current level.
Macquarie commented: "APT's share price should trade in line with SQ going forward and whilst the story is a bit more complicated now vs when the proposed acquisition was initially announced in terms of the BNPL operating environment, the potential impact to Cash App from waning government payments, and tech multiples coming in on higher rate expectations, SQ shares are still quite undervalued in our view."
US growth slows
Though, it is also worth highlighting that Morgan Stanley estimates that the company's growth in the key US market is slowing.
Yesterday's note reveals that the broker estimates that Afterpay's app downloads grew 10% year on year in December in the US. This was notably lower than its rivals. The broker estimates that Affirm's app downloads grew 90% and Klarna's grew 70%.
However, if Block integrates the Afterpay BNPL service into its Cash App in 2022, which has over 40 million active users, these lagging download rates won't be much of a problem.
