It’s safe to say that the past year has been a sobering period for buy now, pay later stocks.
After soaring in the pandemic-led tech boom, many of the tiny fintech stocks in this space have capitulated. A reflection of the competitive and challenging market it’s now become.
With inflation quickly becoming a hot topic too, the headwinds for these aggressive growth business models may be at risk. The days of cheap capital and booming metrics has been replaced with fears over consumer confidence and rising costs.
But three smaller BNPL outfits — Splitit [ASX:SPT], Openpay Group [ASX:OPY], and Laybuy Holdings [ASX:LBY] — are trying to buck that trend. In fact, with the release of each of their quarterly results today, all three stocks have enjoyed a minor spike higher.
The question is, can they sustain it?
Is a BNPL turnaround on the cards?
Looking at the figures in today’s quarterlies, the results are pretty good.
Splitit has reported a 23% increase in merchant sales volume year-on-year to US$101 million. On top of that, the number of merchants is up 43% over the past 12 months. And management’s decision to undertake a ‘cost rationalisation’ approach — reducing unnecessary cash spending — is clearly winning over investors.
For Openpay, it’s a similar story: the total number of active merchants has increased by 22% quarter-on-quarter. Meanwhile, total transaction volume is up 14% to $94 million for the quarter. And perhaps the biggest and best result is that total revenue reached $8.7 million — up 32% quarter-on-quarter.
Last but not least, Laybuy has posted a gross merchandise value of $203 million for the quarter. That’s a 26% increase for the quarter, and a 47% increase from last financial year. Active merchants also rose by 50% for the quarter and has more than doubled since 2021. With a very respectable $12.1 million in revenue for the quarter too, Laybuy is likely doing a lot better than many expected.
So are these results enough to suggest a BNPL resurgence?
Maybe.
It largely depends on how sustainable this growth is, and what sort of impact rising rates may have. No one really knows how badly consumer spending may be hit by the monetary tightening that’s coming.
At the very least, these results are a good start. They showcase the fact that BNPL may not be as dead as many would have you believe.
Don’t be fooled, though; there’s still a long way to go before we could see them boom like 2020 again. We may never see that kind of speculative frenzy again for BNPL…
Where to next for fintech?
Looking ahead, not just for these three stocks but the sector as a whole, it’s hard to say what comes next.
What I would want to see if I was a shareholder in these stocks, is some proper innovation. They need to start experimenting with new products, services, or technology. I’d like to see someone put a new spin on the whole BNPL trend, and not just try to copy Afterpay.
Whether or not that will happen is entirely up to the market.
All I’ll say is that BNPL may be a sector to watch in the near future. The darkest days may not be over just yet, but one day we may see a resurgence.
In the meantime, if you’re looking for more actionable small-cap investments, we’ve got you covered. The seven stocks in our latest report contain some of our top picks across the ASX, right now. A sampling of the best opportunities across a range of sectors and trends.
To find out more, and learn the names of these seven stocks, click here.
Regards,
Ryan Clarkson-Ledward,
For Money Morning
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