You are here: Home » International » News » Companies
Business Standard

PayPal entry punishes Australia's pricey buy-now-pay-later stocks

Shares in Australia's Afterpay Ltd tumbled for a second day, as the entry of PayPal into the buy-now-pay-later sector sent investors scrambling to re-price its frothy stocks

Topics
PayPal | Australia

Reuters  |  SINGAPORE 

PayPal entry punishes Australia's pricey buy-now-pay-later stocks

SINGAPORE (Reuters) - Shares in Australia's Afterpay Ltd and its smaller consumer lender rivals tumbled for a second day on Wednesday, as the entry of U.S. giant into the buy-now-pay-later sector sent investors scrambling to re-price its frothy stocks.

Afterpay fell as much as 12.4%, before paring losses, and has shed about A$2.4 billion ($1.8 billion)in market capitalisation in the two trading sessions since Holdings Inc said it would offer small, short-term loans to U.S. customers.

"Having such a large customer base already in the U.S., certainly throws a spanner in the works for their expansion plans," said James Tao, a market analyst at CommSec in Sydney.

Rivals also tumbled, with Zip Co Ltd dropping as far as 17.7% and Sezzle Inc 15.5% before both trimmed losses. They have each lost more than 23% in two days. Openpay Group Ltd and Splitit Ltd each fell about 9%.

Afterpay and other alternative credit firms, which offer small instalment loans to shoppers and make money by charging merchants a commission, are riding the boom in online shopping that has been sparked by the coronavirus pandemic.

The United States is regarded as the sector's largest growth market and is a key focus for most of the Australia-listed buy-now-pay-later

PayPal's U.S. offering is a fee and interest-free loan for purchases between $30 and $600, repayable in four instalments over six weeks.

That is broadly similar to Afterpay's product, which has proven popular enough among millennials to convince investors of its growth potential.

A 900% rally in the share price since March has catapulted the company into Australia's top 20 largest listed firms, even though it has never turned a profit.

Afterpay, Zip Co, Sezzle, Openpay and Splitit did not immediately respond to emailed requests for comment. Zip Co's CEO was quoted in the Australian Financial Review as saying his firm expected and is prepared for more competition.

($1 = 1.3600 Australian dollars)

 

(Reporting by Tom Westbrook; Editing by Muralikumar Anantharaman)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, September 02 2020. 09:04 IST
RECOMMENDED FOR YOU
.