Source: Predictions based on Visible Alpha analyst consensus
How does the buy-now-pay-later pioneer work?
August 2021, Australia’s buy-now-pay-later icon Afterpay announced a $ 39 billion takeover agreement with US payment giant Square. The deal was agreed that Afterpay shareholders would receive a fixed exchange ratio of 0.375 Square shares for every share they hold. Given Square’s shareholder’s green light, the transaction is expected to close in the first quarter of next year.
Afterpay Ltd (ASX: APT) has been in the limelight for many years for its exceptional performance, especially in 2020, its share price has grown a staggering 15x, from a low of $ 8 in February to $ 117 by the end of the year, and continues to climb hit a record high of $ 160 in February 2021. Since then, Afterpay has had a weak but quiet period until the acquisition agreement was announced.
The merger immediately boosted Afterpay’s share price due to the value connection deal, but the shares of BNPL providers have been trading largely unchanged since then. Even so, from its current level of $ 118 per share (at the time of writing), the stock price is still up a whopping 4000% over the past five years.
Based on the current Square share price and the latest exchange rates, the acquisition price is $ 125. The current price of $ 117-125 will remain the main range as stocks often trade at a discount to the acquisition price to accommodate uncertainties. However, major market risks can trigger further movement, either from the Square side or the Afterpay side.
From a purely technical perspective, the momentum for Afterpay is on the downside, with the weekly RSI pointing down and near the oversold area. The candle fell out of the descending triangle and was below all major daily moving averages. The $ 115 level could offer modest support in the short term, while a notable gap between $ 107 and $ 114 could cause Afterpay stocks to decline further. On the flip side, a resistance level following the 20-day SMA and 100-day SMA at around $ 121 could open a push to the upside, but with a very tight margin, like the restrictions on the Square- Previously specified the share price.