Why Square is spending $29B to secure BNPL player Afterpay Square has two options: buy it now and pay a lot or buy it later and pay moreSquare shares rose this morning following the announcement of its second quarter earnings. The company also announced that it would buy Afterpay (an Australian buy now, play later (BNPL), player) in a $29billion deal. TechCrunch reports that Afterpay shareholders will be receiving 0.375 shares of Square as compensation for existing equity.Afterpay shares are now up sharply, thanks to the implied premium. Square shares are up 7% in early morning trading.The Exchange explores markets, startups, and money.It's available every morning at Extra Crunch. You can also subscribe to The Exchange newsletter every Saturday.We have written extensively over the past year about the BNPL markets, often from the perspective earnings from companies operating in this space. Afterpay, as well as the still-private Klarna or Affirm U.S. BNPL outfits, has been a major data source. Each company has experienced strong growth over recent years, with the United States emerging as a major competitive market.Apple, a consumer electronics and services company, is reportedly preparing to enter the BNPL market. According to our understanding, any such move by Cupertino could have a greater impact on mass-market BNPL players than niche-focused businesses. Apple is a strong competitor in BNPL services aimed towards consumers because of its fintech base and IRL payment acceptance. However, Apple would be less competitive for BNPL services aimed specifically at niches or industries.Let's now look at the Square-Afterpay deal. We are interested in what Afterpay means for Square in terms revenue, growth, and reach. We want to calculate the price Square will pay to acquire the company, and what this might reveal about the value and potential impact of BNPL on fintech revenues. Next, we will look at the numbers and decide if Square has overpaid for Afterpay.Square's Afterpay: What Square has to offerSquare and Afterpay, as with many major deals these days released an investor presentation presenting their case in support of their combination. Let's take a look at it.Square is a dual-part company. It has a large consumer division via Cash App and a large business section that provides payments tech services to corporate customers. Square is currently building banking services for business customers, and Cash App provides some investing and banking functionality for consumers.
