Buy now, pay later stocks roiled by Apple's entry (updated)

Openpay

07/06/2022 15:28

(Adds U.S. stocks, analyst comment)
    June 7 (Reuters) - Shares of buy now, pay later (BNPL)
companies stumbled on Tuesday as the entry of Apple Inc  AAPL.O 
threatened to ratchet up competition in a sector reeling from
geopolitical tensions, regulatory scrutiny and rising interest
rates.
    The service, called Apple Pay Later, presents a direct
challenge to Afterpay-owner Block Inc  SQ.N , PayPal Holdings
 PYPL.O  and Affirm Holdings  AFRM.O  - the biggest BNPL player
in the United States.
    "(The) move into BNPL suddenly makes Apple the most accepted
BNPL product out there," said Vincent Caintic, an analyst at
Stephens Inc.
    He added Apple has a big competitive advantage over industry
players as its Apple Pay service was used by 85% of U.S.
merchants, compared with rivals' relatively small presence. 
    Shares in Affirm, PayPal and Jack Dorsey-led Block fell
between 1.1% and 4.8%, while Australia-listed peers Zip Co
 ZIP.AX  and Sezzle Inc  SZL.AX  closed down 5.2% and 14.4%,
respectively.
    "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.
    Even before Apple's entry, the sector was under pressure as
a boom sparked by the pandemic fizzled out and governments
ramped up oversight of what was a largely unregulated industry.
    Responding to that pressure, Swedish fintech firm Klarna -
seen as the bellwether of the industry - laid off 10% of its
staff last month.  urn:newsml:reuters.com:*:nL2N2XF1D9 urn:newsml:reuters.com:*:nL2N2XH1CI
    Affirm, however, said on Tuesday it was confident about its
long-term prospects.
    "Even as more players join the movement we started, the
prize remains massive, and Affirm is well-positioned to win," a
company spokesperson said.
    


 (Reporting by Indranil Sarkar, Savyata Mishra and Chavi Mehta
in Bengaluru, additional reporting by Hannah Lang in Washington;
Editing by Shailesh Kuber and Aditya Soni)
 ((Indranil.Sarkar@thomsonreuters.com; Mobile:  +91
7022132226;))