Wedbush Analyst: Afterpay Deal May Lead To Square Super App, Boost Consumer Side

Square’s acquisition of Afterpay is “all about monetization,” according to Wedbush analyst Moshe Katri, speaking on Yahoo Finance, per Twitter.

Square plans to buy Afterpay for approximately $29 billion.

Katri said the deal would see the number of active users on the consumer side of the business increasing by a sizable amount.

Wedbush Analyst Moshe Katri on Square’s acquisition of Afterpay: “In terms of the strategic rational, this is a transaction that significantly expands the number of active users on the consumer side of the business.” pic.twitter.com/ZJks9YgHKF

— Yahoo Finance (@YahooFinance) August 2, 2021

“And then on the flip side of it, Square has what they call millions of merchants that they cater to and then Afterpay brings in about 100,000 incremental merchants. So hypothetically, you have more access to merchants and consumers,” Katri said.

Square intends to connect Afterpay with its current Seller and Cash App business units, letting “even the smallest of merchants to offer BNPL [buy now, pay later] at checkout,” according to Square.

“This is really a digital banking product with a BNPL option, if you think about that,” Katri added. “PayPal is headed that way, Stripe is headed that way… So I think ultimately, you’ll have…competitors that have a digital banking app, or the super app that people are going to be focusing [on]. And I think Square’s up there … and a bunch of other players [are there as well].”

Shares of Square and Afterpay finished trading on Monday (August 2) up over 10 percent each — after the news had broken. Square finished trading at $272.38, up 10.16 percent.

Shares of Afterpay on the ASX were up more than 12 percent as of shortly before 11 a.m. Afterpay American Depository Receipts (ADRs) were up 35 percent on the bid.

Read more: BNPL Takes Its Next Dramatic Turn As Square Buys Afterpay For $29B

“Square and Afterpay have a shared purpose,” said Square Co-Founder and CEO Jack Dorsey in the release. “We built our business to make the financial system more fair, accessible and inclusive, and Afterpay has built a trusted brand aligned with those principles. Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.