Grab a bucket and a mop because Afterpay is leaking cash with losses up 336%

Is Afterpay set to say bye now, pay later? Only time will tell.

What's the key learning?

Buy now, pay later companies that saw a lot of growth in 2020 are struggling now - Afterpay isn't the only one.
Interest rate rises, riskier borrowers and the end of the COVID online sales boom are all contributing factors.

👉 Background: Afterpay is one of the biggest fintech success stories in Oz. It first listed on the ASX in May 2016 with a valuation of $125 million. Six years later, it was acquired by Block (FKA Square) in a 'UGE $39 billion deal 🔥 .

👉 What happened: Afterpay has recorded its first results since its acquisition and it ain't pretty. We're talkin' losses of $345.5 million for the six months to December 31. That's a 336% increase.

👉 What else: While the company cites employment expenses and taking on risky borrowers, is it bye-bye-bye to buy now, pay later?

🔔 What's the key learning?

💡 While the buy now, pay later (BNPL) industry used to be the star quarterback...it might now be the retired coach.

💡 BNPL companies that experienced serious growth in 2020 have seen their share prices tank over the last six months. We're talkin' Zip, Sezzle, Humm and OpenPay ALL down 💸💸.

💡 There are a few reasons for the major price drop:

Interest rates are set to rise, which increases borrowing costs for lenders
The COVID online sales boom is waning
Expanding customer bases means taking on risker borrowers that may be unable to pay back their debts.

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Grab a bucket and a mop because Afterpay is leaking cash with losses up 336%

What's the key learning?

🔔 What's the key learning?

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