Huge share price falls might make it look like buy now, pay later is in deep strife. But it’s important to distinguish between the market values of these stocks and the usefulness of their product | OPINION from clancyyeates
The spectacular wipeout in the share prices of buy now, pay later operators such as Zip Co, Sezzle and Afterpay’s owner Block has, quite rightly, been seen as theBut amid the market carnage, here’s something that might surprise you. For all the woes facing the BNPL sector, even the most sceptical analysts believe the “pay in four” payment method made famous by Afterpay is here to stay.
That’s the big question facing this industry, which has been one of the most divisive parts of the Australian sharemarket in the last few years. Since then, valuations have been whacked by a brutal combination of factors. Rising interest rates have prompted investors to dump speculative loss-making tech stocks; bad debts have jumped sharply; regulation is increasing; and competition is intensifying., with Zip Co abandoning plans to merge with Sezzle, while CBA faced a $2 billion hit on the value of its investment in Swedish BNPL group Klarna.
Plenty of evidence would suggest that lots of people - particularly younger shoppers - find it helpful to divide their payments up into four instalments, rather than risk paying high interest on a credit card. That trend doesn’t look like changing anytime soon.
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