BNPL turns to BNPN (Buy Now, Pay Now) 👀; NFTs for physical luxury goods? 🤔 (might be huge); UK’s latest unicorn 🇬🇧🦄 (building Apple’s in-app payments service alternative)
Good Morning FinTech, 12 May
Good day Everyone,
And happy Thursday! The week is approaching an end but the FinTech space is as hot as never before. Today’s 3 stories explore a changing sentiment and some worrisome trends in BNPL, an NFT project that is both interesting and potentially huge, and UK’s latest unicorn. Let’s jump straight to the good stuff:
BNPL turns to BNPN (Buy Now, Pay Now) 👀
Spotting the trends 📉 Buy Now, Pay Later aka BNPL was one of the hottest verticals in FinTech. But the tides might be shifting. Afterpay, Klarna, Affirm, and other BNPL players that were thriving recently might need to regroup very soon.
More on this 👉 Let’s look at the data that’s merging into a worrisome trend:
San Francisco-based Affirm is one of the biggest BNPL companies, which allows shoppers to obtain unsecured instalment loans when they buy clothes, electronics, and other goods online. Despite its luck with Peloton and signing both Amazon & Walmart as partners, Affirm’s market cap has fallen to less than $5B (= a decline of more than 80% from a high last November). Quarterly results due on Thursday are expected to show a net loss of $156M on $345M of revenue, according to a Bloomberg poll of analysts. That’s not good…
Further, shares of FinTech Upstart tanked 56% yesterday alone, despite the company's better-than-expected earnings (revenue more than doubled and profit rose 3X). The AI-driven platform connects people with less-than-stellar credit scores to lenders with favorable terms. If that wasn’t enough, Upstart cut its revenue forecast for the year and predicts lower sales and zero profit for this quarter. Ouch.
Ok, this is US-only maybe, so too early to worry, right? Unfortunately… BNPL stocks have come under heavy selling pressure in Australia too. Shares in Zip Co, Australia’s largest BNPL provider, have dropped 72% this year as shareholders balk at the prospect of rising bad debts.
On top of that, BNPL player BizPay has laid off 30% of its workforce, saying tough market conditions for tech companies have forced it to streamline its operations.
While others aren’t taking such harsh measures just yet, they have clearly put a stop to hiring. For instance, hiring at Afterpay (that got acquired by Square aka Block for $29B) fell significantly in early February of this year and is nearly at year-to-date lows:
Hiring growth Klarna, one of the most valuable private FinTechs in the world and some of the most prominent BNPL players, has also started falling since March 24 after steady going up since July 10, 2020:
So what does this tell us? There’s clearly a shift happening in the market as we speak and Buy Now Pay, Later is transitioning to Buy Now, Pay Now. Here’s the takeaway: