Australia's BNPL stocks wilt after Apple announces entry

Openpay

07/06/2022 10:08

June 7 (Reuters) - Australia's 'buy now, pay later' shares
(BNPL) dived on Tuesday after Apple  AAPL.O  launched its pay
later service, at a time when surging interest rates, stubborn
prices and geopolitical tensions have led to an emaciated global
fintech industry.
    Australia-listed BNPL firms like Zip Co  ZIP.AX  and Sezzle
Inc  SZL.AX , and those with exposure to the sector like Humm
Group  HUM.AX  and Openpay Group  OPY.AX , have taken
double-digit hits to their share price this year, much like
their counterparts elsewhere in the world.
    Their shares fell between 3.1% and 14.4% on Tuesday as
Apple's entry into the BNPL market now only adds to the pain
caused by an unfavourable economic climate, which dissuades the
average consumer from discretionary spending.  
    "BNPL players took a big hit on ASX today as Apple's latest
BNPL offering competes with their products directly, adding to
the gloomy outlook that BNPL firms will struggle to survive the
cost-of-living crisis," said Kunal Sawhney, chief executive
officer at Kalkine Group.
    Swedish fintech firm Klarna, seen as the bellwether of the
industry, laid off 10% of its staff last month and a recent
round of capital raising revealed a massive valuation erosion.
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     Meanwhile, Afterpay, acquired by Jack Dorsey's Block  SQ.N 
for $32 billion, saw bad debts more than double year-on-year in
the six months to December. 
    Adding to the BNPL sector's woes, Australia's central bank
surprised markets on Tuesday with a 50-basis-point rate hike,
twice what was expected and the most in 22 years. It also
flagged more tightening to battle surging inflation.
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 (Reporting by Indranil Sarkar and Savyata Mishra in Bengaluru;
Editing by Shailesh Kuber)
 ((Indranil.Sarkar@thomsonreuters.com; Mobile:  +91
7022132226;))