Buy Now, Pay Later, Investors Should Buy The Best Deals

Square has bet on Afterpay the future of “buy now, pay later” and bought it for $ 29 billion. Investors need to spread the tip.

The transaction has surged purchases on the stock market as well as online checkout carts. Affirm Holdings and Zip Co. Stocks of other so-called BNPL players, including, soared after the deal, despite the fact that their huge competitors teamed up with Square. Square’s willingness to pay premiums to one of its peers exaggerates concerns about commoditization of installments and indicates that the market is generally ready for significant growth. Seems to be.

Even if it seems counterintuitive, there are certainly reasons to stay current. Not all BNPL providers do exactly the same thing. For example, Affirm also offers larger, longer-term POS loans for large purchases. Overall, BNPL is likely to account for less than 3% of global e-commerce, with about half of the recently surveyed BNPL users using multiple services, according to payment research firm Stratwhecker Group. Therefore, there may be room for the volume to continue to grow exponentially. In addition, according to Rob Wildhack, an analyst at Autonomous Research, Affirm can well exceed $ 70 per share, even at relative discounts, based on multiples of futures sales acquired by Afterpay.

There may be attractive deals elsewhere. For one thing, PayPal Holdings fell this month. Still, PayPal also offers installments via the payment button, competing with Square in some respects to provide payment services to merchants. However, PayPal installments are already working in your wallet, so you don’t necessarily need an additional merchant buy-in to add more volume. With widespread consumer awareness of BNPL, PayPal is very likely to be a beneficiary.

Shopify, Square’s other occasional competitor for merchants, will also be down in August. Again, Shopify offers installments through the Shop Pay service, which could be lifted by the uptrend in BNPL. In particular, Affirm is a small, short-term installment partner that competes with Afterpay.

Buy Now, Pay Later, Investors Should Buy The Best Deals

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