Site menu

Search by ticker code:
Generic filters

Menu

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Tech sell-off continues: Why Afterpay (ASX:APT) shares are in focus

Tuesday was another tough day for the information technology sector on the ASX.

The tech-heavy Nasdaq fell 2.1% on Monday despite a promising new COVID-19 treatment. Investors instead shifted their focus towards the 10-year US bond yield, which recently spiked to 1.525% on the back of inflation fears.

Since the news that US payments giant Square Inc (NASDAQ: SQ) would acquire Afterpay Limited (ASX: APT), you can see that their share prices have more or less followed each other.

Google Finance: APT vs SQ

The deal valued Afterpay at $39 billion, or roughly $126 per share. Based on the current share price of $113, that’s around a 10% discount to Square’s offer.

Why the volatility?

If you’re a long-term believer in either Square or Afterpay, I wouldn’t get caught up in the short-term price movements too much.

Remember that it’s general market forces at play rather than company-specific changes. Here on the ASX, we’ve seen losses from other quality tech names like Xero Limited (ASX: XRO), NextDC Limited (ASX: NXT) and Dicker Data Limited (ASX: DDR).

Where to from here?

For every 1 Afterpay share held, holders will receive 0.375 Square shares in return. Afterpay will be removed from the ASX, but holders will have the opportunity to have a stake in a much larger combined operation.

Square’s almost comical Price/Earnings (P/E) ratio of 185 might be enough to turn some investors away. But keep in mind how rapidly Square has been growing and how the Afterpay acquisition could complement its existing offering.

From Square’s point of sale (POS) systems, cash app, business services, and stock trading, it’s easy to see why something like Afterpay’s BNPL offering would be a good fit within its ecosystem.

Having such a broad range of financial services all under one umbrella could result in some sticky customers without a strong incentive to switch to an alternative.

If you’re after some other share ideas, click here to read: 2 ASX small cap shares I’d buy in October.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.
Skip to content