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Square to acquire Afterpay for $29B

squareup.com

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Re: Square to acquire Afterpay for $29B

#31

Post by wonnage »

treelovinhippie wrote: post #17
junon wrote: post #9

Earlier quoted context omitted.

I'm completely out of the loop here but plan to integrate Stripe into a new product. Can you elaborate?

Afterpay is a buy now, pay later scheme. It's literally a loan shark service. 25% of their revenue comes from late fees. "The Australian Securities and Investments Commission found one in five buy now, pay later users is missing payments, half of users aged between 18 to 29 cut back on essential items to make repayments, and more than 1.1 million transactions in 2019 incurred multiple missed payment fees. It also war…

How is a zero-interest payment plan loan shark-esque? Total late fees appear to be capped at the lesser of 25% or $68, which also seems less predatory than any credit card.

Re: Square to acquire Afterpay for $29B

#32

Post by AussieWog93 »

treelovinhippie wrote: post #23

Square is buying a loan shark service. "The Australian Securities and Investments Commission found one in five buy now, pay later users is missing payments, half of users aged between 18 to 29 cut back on essential items to make repayments, and more than 1.1 million transactions in 2019 incurred multiple missed payment fees. It also warned 15 per cent of users, and half under 29, had taken out an additional loan to p…

Are Afterpay really to blame for this? Credit cards have been around since the 80s and are far more predatory. Pawnbrokers have been around for centuries.

Even without debt, so many people have an impulse to spend as much as they can and put themselves in a financially precarious situation where one emergency bowls them over.

I'm not saying Afterpay are ethical, but I'm sure you'd find a similar amount of people foregoing necessities to make dumb impulse purchases regardless of payment method.

Re: Square to acquire Afterpay for $29B

#35

Post by version_five »

hn_throwaway_99 wrote: post #26

I've just come to accept that I'll never understand corporate finance. Based on the data I could find, this works out to a sales price of about 76 times revenue for Afterpay. Even for a fast growing company, how can they ever grow into that valuation? Of course, it's an all stock deal, so perhaps it's better to just consider what percentage of Square they're giving to Afterpay stockholders, but I still just can't wra…

We're in a gigantic bubble

Re: Square to acquire Afterpay for $29B

#36

Post by zz865 »

hn_throwaway_99 wrote: post #26

I've just come to accept that I'll never understand corporate finance. Based on the data I could find, this works out to a sales price of about 76 times revenue for Afterpay. Even for a fast growing company, how can they ever grow into that valuation? Of course, it's an all stock deal, so perhaps it's better to just consider what percentage of Square they're giving to Afterpay stockholders, but I still just can't wra…

You're right it doesn't make sense, this isn't normal corporate finance. Its dotcom funny money.

Re: Square to acquire Afterpay for $29B

#37

Post by dangrossman »

jtsiskin wrote: post #33

“Shop now. Pay over 6 weeks.” How is this technically different from a credit card? Just a longer timer period?

No interest, no credit check, late fees are capped, and it won't ever ding your interest rate or credit history if you do miss a payment.

Re: Square to acquire Afterpay for $29B

#38

Post by Gatsky »

pylon wrote: post #20

As a customer are there any downsides to using these BNPL platforms when I'm buying something? I generally never buy anything online that I can't afford to pay for it outright so I have never used them before.

> I generally never buy anything online that I can't afford to pay for it outright so I have never used them before.

They are designed to let people buy impulsively without annoying restrictions like not having enough money. Who would have though this was either an addressable market or a good idea.

I don't get why they are so popular either, or worth this much. They also don't have any moat - any payment provider can offer to do the same thing they do with less hassle for the customer (PayPal has started doing this for example). There are many direct competitors in addition (eg Zip).

Re: Square to acquire Afterpay for $29B

#39

Post by pdog »

$29B is a pretty significant, even for an all-stock acquisition and a company of Square's size.

It would be interesting to see the motivation for this beyond a "shared mission" or "economic empowerment."

Re: Square to acquire Afterpay for $29B

#40

Post by geofft »

junon wrote: post #9
treelovinhippie wrote: post #7

Ok so Square has opted to engage in predatory practices. Noted.

I'm completely out of the loop here but plan to integrate Stripe into a new product. Can you elaborate?

Stripe or Square? Visually similar words and in similar lines of business but definitely different companies.
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