After a persistent upward rise for buy now, pay later (BNPL) stocks, they are seeing a change in sentiment with double-digit losses over the past three months.
Stocks such as Afterpay had been perceived as stockmarket darlings after seeing rises of over 1,000% but poor results had led share prices to fall more recently.
There was also more interest by the big four banks who were seeking to enter the space and challenge the incumbents. Westpac and Commonwealth Bank had already introduced zero-interest credit cards to target the same demographic as BNPL users and it was expected ANZ and NAB would follow suit.
Finally, the Australian Securities and Investments Commission (ASIC) was taking an increased interest in the space which could cause regulatory problems for BNPL providers in the future. The regulator was concerned users were “struggling to juggle repayments” and incurring missed payment fees.
According to FE Analytics, all the major BNPL players had seen falls over the last three months.
The worst-performing stock was Splitit Payments which had seen losses of 40% over the three months to 24 November followed by Sezzle which was down 34%.
Meanwhile Afterpay, the industry leader which was recently acquired by US company Square, was down 20.6% and Zip Co was down 27.4%.
Over one year to 24 November, 2021, Afterpay was the only stock which had reported positive performance with returns of 6% while the other three had all seen losses, again with Splitit returning the worst performance with losses of 78% over one year.
