Equity Strategy
Afterpay Squared: The Third Horizon
Fri 13th August, 2021

The pending takeover of Australia’s Afterpay by US-listed fintech Square has the potential to create a global non-bank financial giant. Both companies are payments specialists – APT for consumers and SQ for merchants – although both are increasingly blurring the lines.

In our view, investors are only partly attributing any value to what the third horizon of success could look like for SQ, given the potential for SQ’s disruptive growth to continue.

A combined SQ/APT could be worth well in excess of the current combined market cap of $US160bn. For context, SQ peer PayPal (PYPL.US) has a market cap of $US330bn. Alibaba Group’s ANT Group IPO – the largest and perhaps most integrated consumer/merchant digital commerce platform with 1.3bn users - was earmarked for $US315bn IPO valuation in November 2020.

We believe the acquisition of APT will accelerate the SQ journey in potentially creating a ‘super app”. A platform where consumers/merchants can interact and exchange across a wide selection of financial services.

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Written by

John Lockton , Australian Equities

John is a leading investment strategist with 20 years experience.

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