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The Afterpay Ltd (ASX: APT) The stock price could be set for another drop on Tuesday as major US indices tumble overnight.
Tech stocks crash on Wall Street
The tech-rich Nasdaq Composite plunged 311 points, or 2.14% overnight, to a two-and-a-half-month low.
It seems that a correction is well underway, with a Nasdaq down more than 7% since early September.
Perhaps more precisely for the share price Afterpay, its future parent company Square Inc (NASDAQ: SQ) fell 5.43% to a two-and-a-half-month low at US $ 226.25.
While Afterpay’s rival listed in the United States, Affirm Holdings Inc (NASDAQ: AFRM) also fell sharply, down 8.42%.
Heading the steep declines in the tech sector, there was a surge in bond yields.
The 10-year US Treasury yield edged up Monday night, hitting session highs of 1.51% and currently trading around 1.482%. It hit a two-month high of 1.56% last week as investors grew concerned about inflationary pressures, looming interest rate hikes and tightening monetary policy.
The popular tech sector has suffered the brunt of the sales as investors turn and rebalance away from high-growth sectors.
What could this mean for the Afterpay share price?
Unlike conventional buyout offers with a fixed price, Afterpay and Square have agreed to a comprehensive agreement whereby its shareholders will receive a fixed exchange ratio of 0.375 Square shares for each Afterpay share they hold on the date. recording.
This means that by the time the transaction closes, which is expected around the first quarter of calendar year 2022, Afterpay shareholders bear the risk of a rise or fall in the share price. Square.
After Square’s stock price fell 5.43% overnight to US $ 226.25, this gives the Afterpay stock price a notional value of $ 116.36 after taking into account the fixed exchange ratio and current exchange rates.