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Square Acquires Afterpay in Monster Acquisition. Does This Make It a Must-Buy?

By Neil Rozenbaum – Aug 2, 2021 at 11:00AM

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Square also reported great second-quarter earnings.

In this video I will cover Square's (SQ -1.43%) Q2 earnings report as well as its acquisition of the Australian buy-now, pay-later company Afterpay (AFTP.F). You can find the video below. 

Earnings highlights

The company reported revenue of $4.68 billion, up 143% year over year, vs. $4.99 billion expected, and earnings per share of $0.39, vs. $0.30 expected. Revenue excluding Bitcoin was $1.96 billion, up 87% YOY. Cash App gross profit was $546 million, up 94% YOY, and seller gross profit was up to $585 million, up 85% YOY. Net income for the second quarter was $204 million. Square processed $42.8 billion in gross payment volume (GPV) in Q2, up 88% YOY. Square Loans facilitated approximately 105,000 loans, totaling $778 million in originations.

Afterpay acquisition

Sunday night Square dropped a bombshell when it announced its plans to acquire Afterpay, which will strengthen integration between the ecosystems of Cash App and Seller. The transaction has an implied value of approximately $29 billion based on the closing price of Square common stock on July 30, 2021, and it is expected to be paid in stock. This means that Square is essentially paying a 39% premium. This is a big move up for Square, as it needs to step up its global presence. Afterpay serves more than 16 million consumers and nearly 100,000 merchants globally, including major retailers across key verticals such as fashion, homewares, beauty, sporting goods, and more.

For the full insights do watch the video below.

*Stock prices used were the closing prices of July 30, 2021. The video was published on August 2, 2021.

Neil Rozenbaum owns shares of Bitcoin and Square. The Motley Fool owns shares of and recommends AFTERPAY T FPO, Bitcoin, and Square. The Motley Fool has a disclosure policyNeil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Stocks Mentioned

Block Stock Quote
Block
SQ
$68.18 (-1.43%) $0.99
Afterpay Limited Stock Quote
Afterpay Limited
AFTP.F
Bitcoin Stock Quote
Bitcoin
BTC
$17,044.76 (-0.03%) $-4.50

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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