Affirm stock rockets after Square announces $29 billion deal for rival Afterpay

Shares of buy-now pay-later (BNPL) company Affirm Holdings Inc.
AFRM,
+14.90%

are surging more than 18% in Monday trading after Square Inc.
SQ,
+10.16%

announced its plans to purchase BNPL rival Afterpay Ltd.
AFTPY,
+35.16%

APT,
+18.77%

for a 31% premium in a vote of confidence for the payment trend. The deal is valued at $29 billion. Afterpay and Affirm are among companies offering financial technology that lets consumers split their purchases into installments in a break from the traditional credit-card model of compounding interest. Some BNPL products are interest-free, while others carry simple interest. Affirm’s stock “will now include an M&A premium,” Bernstein’s Harshita Rawat wrote in a note to clients. In her view, the deal announcement translates to a negative read for PayPal Holdings Inc.
PYPL,
-1.65%
,
which also has expanded into BNPL and is seeing a 0.2% drop in its stock during Monday’s session. She saw a positive read through for Marqeta Inc.
MQ,
+1.30%
,
which works with both Afterpay and Square on debit-based products, though Marqeta shares are off 0.4% in Monday trading.

Related post