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Block Completes Afterpay Acquisition; Stock Jumps 11%

Block (SQ) has completed the acquisition of the “buy now, pay later” (BNPL) platform Afterpay. Block stock rose about 11% to close at $122.29 on Monday.

Afterpay partners with merchants to allow shoppers to receive products immediately and pay for them in installments over time. It allows for interest-free payments in four installments. As of June 2021, Afterpay worked with about 400,000 retailers and served more than 16 million customers. The service is available in Australia, New Zealand, the U.S., and Canada. Afterpay is also available in the U.K., France, Spain, and Italy, under the Clearpay brand.

Block CEO Jack Dorsey commented: “We’re excited to welcome the Afterpay team to Block and are eager to get to work…we’ll deliver even better products and services for sellers and consumers while staying true to our shared purpose of making the financial system more fair and accessible to everyone.”

Afterpay Integration

Square has begun rolling out Afterpay’s BNPL functionality to sellers in the U.S. and Australia.

In America, about 55% of consumers have used a BNPL service, with the majority being young shoppers, and according to Block, there is a growing demand for the service.

Block will also allow Afterpay users to manage their installment payments directly in Cash App, its platform that allows people to send, spend, and invest their money. Additionally, Cash App users will be able to discover sellers and BNPL offers directly in the app.

Analysts’ Take

BTIG analyst Mark Palmer recently maintained a Buy rating on Block stock but lowered the price target to $230 from $320. Palmer’s reduced price target still suggests 88.08% upside potential.

Consensus among analysts is a Moderate Buy based on 17 Buys and 6 Holds. The average Block price target of $236.86 implies 93.69% upside potential to current levels.

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