This video contains a market update interview in which I discuss Square’s decision to acquire Afterpay for USD 26 billion (AUD 39 billion), approximately. This is a stock for stock acquisition that would give Afterpay shareholders stock in Square. I discuss the logic behind teh acqusition, and issues with late payments (and late payment fees). I also discuss whether this is good for Afterpay shareholders and for stock in other BNPL firms, including Zip. I briefly discuss how Zip’s business model differs from Afterpay in the relevant sense.

The stock market reaction was positive. Afterpay’s stock surged 19% on the announcement. This is still shy of the approximately 30% premium that Square has offered. Other BNPL companies saw their prices increase. For example, Zip also increased 9%. This potentially reflects either a possibility these firms might come in play as targets and/or a reevaluation of their growth prospects and earnings.

#Afterpay #BNPL #Square

Books
* My regression book: https://amzn.to/3v22Asg
* My valuation book: [US]: https://amzn.to/2LUwYQW [Australia] https://amzn.to/2WWX6Ra

Courses:
* Portfolio Management: https://bullbearfinance.teachable.com/p/portfolio-management
* International Finance: https://financialanalysis.teachable.com/p/international-finance
* Valuation: https://bit.ly/36nFfGp
* Options, Futures, and Derivatives: https://financialanalysis.teachable.com/p/options-futures-derivatives

My Patreon: https://www.patreon.com/bullbearfinance

****************************
*MY GEAR
****************************
Razer Seiren Mini: https://amzn.to/2Sbmtz2
Logitech c922: https://amzn.to/2xDUfTs
Softlight setup available here from Amazon: https://amzn.to/2xHVEbF
Wacom writing tablet: https://amzn.to/2YHmyeK

Digital payment platform Square is set to purchase fintech company Afterpay for $29 billion. After pay allows users to purchase items and make payments in installments. Sanjay Sakhrani, a senior equity analyst at KBW, joined Cheddar’s Closing Bell to talk about how the acquisition will allow Square to expand its financial service offerings with the Australian buy-now-pay-later platform.

Subscribe to Cheddar Now on YouTube: https://chdr.tv/NowYT

Subscribe to Need2Know in your favorite podcast app. https://chdr.tv/8gas

�� Buy now, pay later. Jack Dorsey’s Square is looking to buy Afterpay for $29 billion. MoffettNathanson Partner Lisa Ellis unpacks the deal, what it means for global payments, and why the app is “as much of a marketing services type of offering as it is a lending offering.”

It’s easy to still think of Square as just another payments company – in reality, Square has been slowly edging towards bank-like features. A transition that will be accelerated by its new, whopping $29 billion acquisition of Afterpay. But it turns out that this deal is not just about jumping on the Buy Now Pay Later bandwagon after all. And in this video, we’ll tell you why!

#Inclusion #Banking #FinTech

Timestamps:
00:00 Intro
00:16 Square acquiring Afterpay
1:24 What lead to the acquisition
2:11 Potential motives behind the acquisition

********************************************
Subscribe to watch the hottest topics in payments every Monday ► https://www.youtube.com/channel/UCpX0b_OB5O0UwcvQ6w7hczQ?sub_confirmation=1

STAY CONNECTED:
PaymentGenes ► https://link.paymentgenes.com/Website-Youtube-AAP
LinkedIn ► https://link.paymentgenes.com/LI-Link-Youtube-AAP
Twitter ► https://link.paymentgenes.com/twitter-youtube-aap

********************************************
Transcription:

Hi All about payments’ friends! Welcome back to another episode of our show!

After a short break, we are now back on the regular schedule, energized to cover the industries’ hottest topics with our thoughts, opinions and theories – so stay tuned for a new video every monday morning!

It’s easy to still think of Square as just another payments company — in reality, Square has been slowly edging towards bank-like features, a transition that will be accelerated by its new, $29 billion acquisition of Afterpay. It is certainly worth noting that Square finally got a conditional approval for a banking license.
Square’s all-stock deal fuels the already flourishing & accelerating buy-now-pay-later market.

In essence, Square will now compete with dominant players such as Klarna, and giant firms like Apple, PayPal, and Visa that have been drawn more recently to the market.

Good morning everyone, this is Marek from PaymentGenes and today, it’s all about payments!

So yes, $29 billion for a Buy Now Pay Later platform is an extremely high price. But it turns out that this deal is not just about jumping on the buy now pay later bandwagon after all. And in this video, we’ll tell you why!

Let’s start by stating the obvious, Buy Now Pay Later is taking the fintech world by a storm. There’s not a day that goes by without us seeing buy now pay later in the headlines, and it’s only accelerating in 2021.

The idea of incorporating a BNPL service into Square’s services is appealing, but did Square really need to spend $29 billion to deploy buy now, pay later services?

Well, we know that Square isn’t really making a dent in it’s liquidity, since this is an all stock deal. What the deal is really about is bringing AfterPay’s merchant relationships into Square’s seller ecosystem, and converting AfterPay’s existing customer base into Square’s Cash App users.

Title screen: potential motives behind Square’s Afterpay acquisition

From our perspective, the first reason behind this move is that Square will indirectly gain access to Afterpay’s 16 million user database, enabling them to use level 3 consumer data for future offerings.

On top of that, research revealed that only 13% of Square’s Cash App users earn more than $100,000 a year. In contrast, 31% of BNPL users (who are predominantly Gen Zers and Millennials) have high incomes. Square most likely needs those higher income consumers in order to keep attracting new merchants to the platform.

Another plausible theory is that Square plans on following Klarna’s footsteps in issuing either virtual or physical credit cards to its consumers. Further playing into their moves resembling a bank like proposition.

Regardless of the main reason behind this acquisition, it is clear that this move is highly strategic and well-timed, especially coming at a time where BNPL popularity is through the roof! Best of luck to Square and how this acquisition will leave a footprint on the industry in the coming years.

Share your 2-cents in the comments! Do you think that $29 billion is a fair price for this deal? We’d love to know!

Make sure to give this video a like and subscribe for weekly new videos!