Do you use Afterpay and ever wondered if you can buy Afterpay stock?
If you’re interested in buying Afterpay stock, keep reading and WalletWell will explain how.
Can You Buy Afterpay Stock?
Yes and no.
While you can no longer purchase Afterpay shares directly, you can still invest in the company through the parent company Block Inc.’s stock.
Afterpay was acquired by Block Inc., formerly known as Square, in January 2022 for $29 billion. Yes, you read that number correctly.
Block trades under the ticker symbol “SQ” on the New York Stock Exchange (NYSE). Most other BNPL and financial tech focused companies trade on the NASDAQ, such as Affirm.
When you invest in Block, you’re also gaining financial ownership into Afterpay’s growing Buy Now Pay Later (BNPL) business alongside Block’s other financial technology services.
This includes the well known Square mobile credit payment solution. You likely have seen vendors using Square at concerts, tradeshows, etc. with mobile phones and tablets attached. Square was founded by Jack Dorsey who is one of the co-founders of Twitter.
Block has several other businesses which includes;
- Cash App -the popular peer-2-peer (P2P) payments app
- Tidal – a music streaming service.
- Spiral – What looks like a some type of Bitcoin service.
If you want to invest in Afterpay you need to purchase Block stock to gain ownership in anything with Afterpay.
How does Afterpay make money?
If you reading this you know Afterpay operates as a BNPL service. Afterpay allows for you to pay for purchases over time in 4 equal installments over 6 weeks without bearing any interest. When you compare BNPL vs credit cards, BNPL tends to always be the better option for consumers.
If you are going to invest in Afterpay though, you should be asking… How does Afterpay make money?
I mean they aren’t charging interest so how does that even make any sense?
Afterpay generates revenue in a few different ways:
- They collect fees from the retailer. These fees range from 4% to 6% per transaction.
- Afterpay charges late fees.
- Afterpay will charge interest on longer term loans.
- Data from shopping insights.
Why invest in Afterpay?
Why should you invest in Afterpay?
Some key reasons;
- Consumers spend 40% more on average when using BNPL services.
- Higher conversion rates vs paying upfront.
- Access to Afterpay’s customer base, which tends to skew towards younger.
- Afterpay integrates with existing point of sale systems.
- Real time fraud prevention tools.
| Afterpay Usage Statistics | Data |
|---|---|
| Active Customers | 16.2M |
| Merchant Partners | 100K+ |
| Average Transaction Value | $150 |
| Payment Completion Rate | 95% |
| Annual Revenue (2021) | $925M |
Afterpay’s business model focuses on Millennial and Gen Z shoppers aged consumers. These discerning group are finding BNPL installment plans over traditional credit cards are a better option for paying for purchases.
This demographic represents 75% of Afterpay’s user base according to company data. The BNPL market has a lot of room to grow compared to the tradtionla and predatory credit card services and companies that dominate the personal finance market.
Afterpay’s Acquisition by Block (Square)
Block Inc finished its $29 billion acquisition of Afterpay on January 31, 2022. The all stock transaction valued Afterpay shares at 0.375 shares of Square stock per Afterpay share.
Why was Block interested in acquiring Afterpay?
The deal allowed for Afterpay’s BNPL platform to be integrated into Block’s Cash App ecosystem, expanding payment options for 70 million active users. In addition to the Square system. This also gave Block a treasure of data on consumers spending habits.
Should you Invest in Block Stock?
The real question to ask if you are want to invest in Afterpay… should you invest in Block? Since this is technically the company you need to purchase shares to gain a stake in Afterpay.
The below opinions are a mix of numbers and WalletWell’s opinions on the BNPL industry and Block. We recommend you consult a registered financial advisor before making any decisions.
Now the that is out of the way. 🙂
Block stock offers exposure to several different finance tech segments as we covered. This includes digital payments, cryptocurrency and Bitcoin services, BNPL through Afterpay, and small business payment solutions.
Block maintains a strong market position in digital payment processing with Square and P2P payments via Cash App. Both are extremely popular leading Block to process $197 billion in gross payment volume in 2022. Some quick stats;
- Cash App reaches 70 million monthly active users across the US.
- Square serves 40+ million businesses globally through it’s innovative POS service.
- Afterpay connects 16 million active shoppers to 100,000+ merchants with BNPL.
As of this writing Block shares traded between $51.34 and $83.96 in the past 52 weeks.
Financial metrics for Block (NYSE: SQ) include:
| Metric | Value |
|---|---|
| Market Capitalization | $38.5 billion |
| P/E Ratio | 62.4 |
| Revenue Growth | 25% YoY |
| Gross Profit Margin | 35% |
| Cash Reserves | $4.5 billion |
| Daily Trading Volume | 12.5 million shares |
Personally what doesn’t make sense to me is Spiral business arm of Block. As we covered before crypto is not something that Klarna is interested involved in. Why? Normal people and Klarna’s CEOs mom doesn’t understand Bitcoin and crypto. Therefore I don’t see Spiral being part of the business as a positive.
In addition Tidal hasn’t been a successful music streaming service and it seems like an odd addition to Block’s portfolio of companies. Music and payment and fintech are vastly different industries.
You can invest directly into BNPL companies if you are interested. You can purchase Affirm stock and Klarna will IPO soon.
WalletWell’s recommendation is to do your own research and figure out if are comfortable investing in Block.