Shares of Openpay Group Ltd [ASX:OPY] are flying through 2020. The ‘buy now, pay later’ provider (BNPL) is one of the beneficiaries of the COVID-19 pandemic.
Trading at $3.41 at the time of writing, the OPY share price is up 4.91% on the announcement of a new strategic partnership.
Source: Optuma
What’s happening with OPY?
Back in mid-July the company reported their results for the year, and they were strong.
Here are the highlights:
- ‘Active Plans up 229% — new record — relative to [prior corresponding period] pcp;
- ‘Active Customers up 141% — new record — relative to pcp, with increased repeat usage;
- ‘Active Merchants grew 52% relative to pcp
- ‘Total Transaction Value (TTV) grew to a record $192.8m for the full year, up 98.2% compared to FY 2019 and up 119% for the quarter’
These results are coupled with a recent announcement of a new partnership that will see Openpay work with MSL Solutions Ltd:
‘The agreement will run for an initial term of 3 years and involve a phased rollout of Openpay’s BNPL offering to MSL’s Golf customers in Australia.’
While the results for Openpay are encouraging, it must not be forgotten this was only able to take place against the backdrop of the COVID-19 pandemic, a crisis that is seeing more and more people stuck at home.
Recently we went over the new BetaShares ATEC fund, which is based on Aussie tech companies and BNPL providers — basically, a lot of companies that are booming through the pandemic and why this may not last in the long run.
Openpay may very well be in that same group.
OPY may face pressure if BNPL gets strained
The last few months for Openpay, and the BNPL sector overall, have been amazing in terms of customer growth.
But there are risks. In Victoria there are now Stage 4 lockdown measures, restricting a very large portion of the population to their homes, along with most businesses shut down.
The early predictions are that this action will still cost the economy 250,000 jobs. This could very well bring the economy and thus spending to a halt.
Source: Optuma
From the low in March, Openpay is up over 900%, seeing the same huge growth levels as reflected by most of the BNPL sector.
The OPY share price now looks to be falling away somewhat, should this continue then the levels of $3.07 and $2.44 may provide future support.
On the upside, if the OPY share price turns, then the level of $3.99 may become the future focus.
While Openpay is going through a bit of a golden patch, it’s worth remembering their size — a market cap of only $246 million.
They potentially don’t hold the same sway as Afterpay Ltd [ASX:APT], so if things go bad in the long run for the BNPL sector, OPY may face pressure before companies like APT.
Regards,
Carl Wittkopp,
For Money Morning
PS: Four well-positioned small-cap stocks: These innovative Aussie companies are well-placed to capitalise on post-lockdown megatrends. Click here to learn more.
