Square (NYSE:SQ) turned heads yesterday with its $29 billion acquisition of buy now, pay later firm Afterpay (OTC:AFTPY). Wall Street celebrated by sending SQ stock up over 10%. And now, Wall Street analysts are getting behind the deal as well.
Cowen upgraded Square to an Outperform rating today, on the idea that the Afterpay acquisition will materially boost Square’s growth rates for the foreseeable future.
Afterpay has so many synergies with both Square’s seller and CashApp ecosystems.
Square will easily be able to integrate Afterpay into all of its point-of-sale payment processors at merchant stores, as well as into every online checkout portal the company operates.
And Square is on both sides of the merchant-seller transaction, enabling them to bring buy now, pay later functionality to a vast array of individuals and businesses.
Square can tie Afterpay into CashApp so that individuals can easily use the service to buy products at any one of the merchants that accepts Afterpay. And the number of merchants will increase drastically now that all of Square’s existing merchants now have access to Afterpay capability.
Buy Now, Pay Later Benefits All
Afterpay functionality is a win-win, offering benefits for both customers and merchants.
Buyers win when this capability is offered in retail or online stores, because they gain the ability to buy larger ticket items in installments that would otherwise be out of reach.
Sellers also win, because offering customers the ability to pay in installments has been shown to decrease cart abandonment and boost checkout conversion big time.
To summarize, Square plus Afterpay is a big deal. This acquisition sets Square up for supercharged growth.
And thanks to this growth, SQ stock will keep on powering higher.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.