Buy Now Pay Later (BNPL) Stocks – which one and why?


I mentioned BNPL sector has been the hottest group of stocks that led the recovery from the huge sell off earlier this year. Quite a few of these stocks made new high’s that surpassed pre-Covid highs and rocketed through the ‘blue sky’ space.

The speed of the surge has slowed and in some of the leaders, there is a little pull back that is happening right now. …

hot stocks; as mentioned by @Austwide and others, I too was surprised the Visa & M/Card fightback wasn’t there, so the early players got ahead. But there is no real moat apart from First Mover Advantage. apart from the Aussie BNPLers, numerous others exist in other markets. And turning into businesses that make profits, rewarding shareholders when the growth ‘consolidates’. And that is the other concern; customers. .. are they going to be loyal and profitable. Consumerism and purchases brought forward can only go so far,

Found this, about APT, but applies for all of them as they evolve and shake outs loom:
“Most of the popular focus on Afterpay, which reports its full year results on August 27, and the other buy now, pay later stocks is on top line growth numbers. Revenue is a function of the size of the customer base and merchant network, driven by overall transactions made on the system and the average value of those transactions per user.

But more attention is focusing on the bottom line. Investors hone in on the net transaction margin. Essentially, this examines how much the company is making after bad debts, processing costs and funding costs are subtracted from the merchant and late fees revenue. It reflects that, like banks, buy now, pay later profits need to be offset by the customers who don’t pay.

For now, generous government stimulus packages have been back-stopping bad debts and encouraging spending… so bad debt levels at Afterpay, Zip and the other players have remained low. Short repayment cycles and capped spending amounts for new customers help (users can get access to more credit over time after proving themselves).

In future results, investors should watch Afterpay’s consumer adoption, gross merchant volume and revenue margins and form a view around where these metrics can grow to over the long term We favour Afterpay’s simple and free instalment solution, which has a proven track record of rapid consumer adoption upon launch in new geographies, said an analyst

This land grab for global scale is forcing the main players into losses, which for now investors are willing to tolerate. They understand there are likely to be only be a few winners globally, and getting to scale requires serious investment in marketing, R&D and staff.”



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