Should PayPal Investors Be Worried About Square's Afterpay Takeover?
Square (NYSE: SQ) recently agreed to buy Afterpay (OTC: AFTP.F), an Australian "buy now, pay later" (BNPL) service provider, for $29 billion in stock. The deal represents a premium of 21.9% over Afterpay's ten-day weighted average share price, and values the company at 25 times this year's sales.
Square's stock rallied following the announcement, which accompanied a solid second-quarter report on Aug. 1 that beat analysts' expectations. Meanwhile, shares of its rival PayPal (NASDAQ: PYPL), which had already been sliding following its mixed second-quarter report on July 28, fell even further after Square posted its earnings report and announced the Afterpay deal.
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