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

[over9k]

Like I said, this is not a new concept

 

[Smurf1976]

I was thinking more along the lines of bill smoothing and salary smoothing. Has COVID accelerated, or will it accelerate changes in the way the workforce traditionally receives wages.

A different context but I do recall from the last recession (1991) that a lot of "bill smoothing" sort of things appeared.

Those were mostly offered directly by the company to whom the money was payable though. Eg utilities, councils, banks (for existing loan repayments) and so on all came up with options to pay weekly / fortnightly / monthly to match your pay or welfare payment cycle even if that wasn't when payment was actually required.

I can see the basic concept having relevance given the overall economic situation. Main difference is this time it would be electronic, versus last time it was typically a matter of someone paying small amounts of cash regularly, and more likely done via a third party.

 

[sptrawler]

I wasnt a big fan of the sector, but the daughte r that lives with us has embraced it, I am now noticing that she is wanting to spread her share of the bills out.
Before BNPL, she was really one step ahead and embraced paying bills early, so it will be interesting to see how it develops.
I will try to broach the subject, while walking on eggs, it may give an independent insight into the sector.

 

[frugal.rock]

Before BNPL, she was really one step ahead and embraced paying bills early, so it will be interesting to see how it develops.
I will try to broach the subject, while walking on eggs, it may give an independent insight into the sector

Another dad joke....lol.
Tell her you're doing Market Research and would she like to participate with 3 minutes of her time and how you would really appreciate it.

My eldest child, (13 year old daughter) told me the other day she isn't going to call me daddy anymore, just dad...
didn't bother me greatly as I hoped she would start growing out of it...

However, I replied with the obligatory response of "I'm gonna miss being called daddy", to which her response was "suck it up, princess".

 

[MovingAverage]

I wasnt a big fan of the sector, but the daughte r that lives with us has embraced it, I am now noticing that she is wanting to spread her share of the bills out.
Before BNPL, she was really one step ahead and embraced paying bills early, so it will be interesting to see how it develops.
I will try to broach the subject, while walking on eggs, it may give an independent insight into the sector.

Hi @sptrawler, I'm curious...what is it about these BNPL services that your daughter likes? To be honest I do not understand why consumers are embracing BNPL (probably because I'm too old to understand modern consumer behavior). You don't have to look very hard to find a no fee credit card that gives you loyalty points and around 55 days interest free--that's old school I know. Not that I've looked very hard but I've never heard a compelling theory that explains why consumers are flocking to BNPL providers.

 

[jbocker]

Not that I've looked very hard but I've never heard a compelling theory that explains why consumers are flocking to BNPL providers.

Yes I am another set of old ears wanting to know. Buy Now Pain Later. I expect it is still BUY NOW has always been a huge drawcard. PAIN LATER is probably where its has mostly been worked, a little to a lot less pain.

 

[jbocker]

Back to forum question. Buy Now Pay Later (BNPL) Stocks - which one and why

Part of what I liked about Quickfee (QFE). It is professional market specific - accountants and legal services, where fees have to an extent been paid by cheques (which surprised me). Amongst many other methods of payment I daresay there probably was some credit allowed with established clients, that has had it risks escalate recently. So the issues with risk, chasing payments and with writing handling cashing cheques is being removed for both parties. Covid was the catalyst for change. Through Quickfee the service provider gets their fee much faster with much less admin and with much more certainty. The client among other things gets options to fund costs, pay now or over an extended period.
The attraction is beyond the Covid, it is unlikely the payments will return to previous systems like a cheque system and a system has been gained that has better access and management to contracts and invoicing for all concerned.
A little more than simply BNPL. Hopefully a lot more than what I have gleaned. DYOR.
Is it a finite market? It has made some good inroads in the US and potentially has a fair way to go (I think it originated in Aus). Could it be expanded to other professional services? I don't know.

 

[aus_trader]

Another dad joke....lol.
Tell her you're doing Market Research and would she like to participate with 3 minutes of her time and how you would really appreciate it.

My eldest child, (13 year old daughter) told me the other day she isn't going to call me daddy anymore, just dad...
didn't bother me greatly as I hoped she would start growing out of it...

However, I replied with the obligatory response of "I'm gonna miss being called daddy", to which her response was "suck it up, princess".

Wait till you eavesdrop on them talking to their friends about "my old man says..."

 

[aus_trader]

Hi @sptrawler, I'm curious...what is it about these BNPL services that your daughter likes? To be honest I do not understand why consumers are embracing BNPL (probably because I'm too old to understand modern consumer behavior). You don't have to look very hard to find a no fee credit card that gives you loyalty points and around 55 days interest free--that's old school I know. Not that I've looked very hard but I've never heard a compelling theory that explains why consumers are flocking to BNPL providers.

It's been no secret that we have become a nation of "must have now" when it comes to pretty much everything. It doesn't just stop at the retail/online checkout but goes onto cars and houses.

BNPL stocks have had a massive run and I am actually surprised how far they have run. Didn't catch many although I got involved in a couple of them and made a bit of coin , so not complaining. The latest position that closed for just over 100% gain is the stock @jbocker mentioned above QuickFee Ltd (QFE), details of buy/sell dates in Speculative Stock Portfolio.

There is a lot of stocks in this space and all competing for the market share, so I don't know if there is some saturation happening. The latest stock added to ASX in that space is Laybuy Holdings Ltd (LBY).

 

[peter2]

Paypal have announced that they are entering the BNPL market with their Pay in 4 service. They're planning on asking the merchants to pay less than the 4-5% Afterpay charges. The presence of large multinational corporations will squeeze the margins.

 

[Smurf1976]

The attraction is beyond the Covid, it is unlikely the payments will return to previous systems like a cheque system and a system has been gained that has better access and management to contracts and invoicing for all concerned.

Sort of related but one thing I'm aware of is pressure on business, especially large business, to pay invoices promptly.

Government has had that policy for a while, I'm aware of one government organisation which automatically applies a penalty to themselves if they pay late, but there seems to be a lot of pressure mounting on big business to do the same.

This may lead to a greater move away from payment on invoices in favour of more direct methods of payment is my thinking. If so, well that's either credit cards or some other platform realistically since cash tends to be hugely problematic for that purpose.

So I can see a potential corporate market for some of these services as well as consumers. That would be especially so for anyone who comes up with someting which suits internal accounting and management control far better than credit cards with their monthly statements do. Eg set it up that the relevant manager automatically gets a text when the office junior spends more than $x and things like that.

There's definitely pressure in that direction though, indeed there's some talk of publicly revealing the payment processing times of listed companies in a "name and shame" sort of way.

 

[aus_trader]

Sort of related but one thing I'm aware of is pressure on business, especially large business, to pay invoices promptly.

Government has had that policy for a while, I'm aware of one government organisation which automatically applies a penalty to themselves if they pay late, but there seems to be a lot of pressure mounting on big business to do the same.

This may lead to a greater move away from payment on invoices in favour of more direct methods of payment is my thinking. If so, well that's either credit cards or some other platform realistically since cash tends to be hugely problematic for that purpose.

So I can see a potential corporate market for some of these services as well as consumers. That would be especially so for anyone who comes up with someting which suits internal accounting and management control far better than credit cards with their monthly statements do. Eg set it up that the relevant manager automatically gets a text when the office junior spends more than $x and things like that.

There's definitely pressure in that direction though, indeed there's some talk of publicly revealing the payment processing times of listed companies in a "name and shame" sort of way.

That's actually a great idea. I think the payment processing times of some of the large organisations are horrendous

Some of the larger firms and Govt organisations have like 5 levels of hierarchy that paperwork has to go through before payments for an invoice is approved, taking weeks and months !

 

[Dona Ferentes]

That's actually a great idea. I think the payment processing times of some of the large organisations are horrendous

Some of the larger firms and Govt organisations have like 5 levels of hierarchy that paperwork has to go through before payments for an invoice is approved, taking weeks and months !

still there is the need for checks and balances. A lot of criminal activity relating to false invoices. (old school phishing)

 

[aus_trader]

still there is the need for checks and balances. A lot of criminal activity relating to false invoices. (old school phishing)

True, who's that celebrity that couldn't come up with where a lot of his charity money went.

So, independent auditing and accounting would need to be done to iron out such practices.

 

[over9k]

It's been no secret that we have become a nation of "must have now" when it comes to pretty much everything. It doesn't just stop at the retail/online checkout but goes onto cars and houses.

BNPL stocks have had a massive run and I am actually surprised how far they have run. Didn't catch many although I got involved in a couple of them and made a bit of coin , so not complaining. The latest position that closed for just over 100% gain is the stock @jbocker mentioned above QuickFee Ltd (QFE), details of buy/sell dates in Speculative Stock Portfolio.

There is a lot of stocks in this space and all competing for the market share, so I don't know if there is some saturation happening. The latest stock added to ASX in that space is Laybuy Holdings Ltd (LBY).

I know that AFT and Z1P have dropped a fair bit lately, but so has everything.

It's worth noting that the incumbents have some pretty big contracts and brand recognition/mindshare in the consumer, so they're not going to be dislodged overnight.

Like I said before, credit cards have had those 55 days interest free etc etc policies for ages, and yet afterpay & zip pay have become the successes that they have anyway.

I also can't see consumers wanting to make 30 different post-pay type accounts with a billion credit checks etc etc, it's just too much of a pain in the ass.

This isn't to say that there isn't going to be *some* kind of effect, but I'd say this is one of those "rumours of their demise has been greatly exaggerated" kind of moments.

 

[MrChow]

79 companies (according to an ASX screener) have doubled in share price in the past 12 months.
- 67 of them are unprofitable.
- 12 of them are profitable.

So in determining which BNPL to buy, to me it's not about company fundamentals. It's about human behaviour, stories and sentiment, which I have no way of reliably tabulating and analysing.

 

[aus_trader]

This isn't to say that there isn't going to be *some* kind of effect, but I'd say this is one of those "rumours of their demise has been greatly exaggerated" kind of moments.

Agree. They have made a stance in the consumer market place and they'll fight to let go of their share of the pie to competitors and newcomers.

But as @MrChow said, there will be winners and losers and some of the companies that have huge future multiples baked in may experience a correction of some sort if those future expectations are not met. Winners could continue to do well...

 

[over9k]

I bet the next earnings reports (and especially the ones after xmas) are bloody good

 

[aus_trader]

I bet the next earnings reports (and especially the ones after xmas) are bloody good

I suppose so, I'll be keeping an eye out for who's winning market share and who's falling behind...

 

[Smurf1976]

They have made a stance in the consumer market place and they'll fight to let go of their share of the pie to competitors and newcomers.

It'll almost certainly be like most industries in the long term. A small number of players emerge as dominant.

Those old enough will remember that 25 years ago many internet companies had less than 100 customers all up and were literally operating from someone's spare bedroom. Or go back to the early 1900's and there were a huge number of companies manufacturing cars, most of them with truly miniscule production rates.

This'll be the same I expect. Come back in a few years and there'll be 2 - 4 dominant players and half a dozen smaller ones and that's it.