Why the Afterpay, Zip and Sezzle share prices are lower today
Shares in BNPL providers Afterpay and Zip Co have lost 16%-30% of their value in the last three months.
Investors are paying close attention to buy now pay later (BNPL) providers Afterpay (ASX: APT), Zip Co Ltd (ASX: Z1P) and Sezzle (ASX: SZL) on Friday. The stocks were all trading lower at the time of writing, with Afterpay down 0.4% at $94.86, Zip losing 1.8% to $7.03 and Sezzle down 2.2% at $8.99.
Why BNPL stock prices are in the spotlight
Shares across the BNPL spectrum seem to be taking a breather, with investors keen to book some profits after the run up in the previous session.
That had been triggered by the announcement by Sezzle on Thursday that it had entered into a 3-year agreement with US retailing giant Target to provide its interest-free payment plans in-store and across Target’s digital platforms.
The partnership is considered significant for Sezzle, which largely operates in the US market, given Target’s reach and customer base.
The news saw a run-up to Sezzle shares surging more than 20% and also rubbed off on sector rivals, with Afterpay seeing gains of 3% and Zip Co up 2.4%.
But investors seem to have done a bit of a reality check on Friday, with all three stocks losing ground.
Sezzle’s announcement was the latest indication of rising competition in the BNPL industry as each of the major players consolidates their position, something that analysts have been warning about for some time now.
Just last month, came news that Klarna, a key rival for Afterpay and Zip in the European market, was close to tying up new funding backed by SoftBank and several other major investors, ahead of a potential stock market listing.
Days earlier, Zip Co announced it would raise stakes to take control of UAE-based Spotii Holdings and Europe-focused Twisto Payments, boosting its international footprint.
Analysts believe competition will rise further in the BNPL market as more players look to take advantage of strong global economic recovery following the vaccine rollout.
Financial industry heavyweights such as global leader PayPal and CBA have already announced their own BNPL segment plans.
That could result in a few years of pain for all players in the market, analysts at Macquarie recently said in a report.
Those concerns have weighed on BNPL shares in recent months, with Afterpay down 20%, Zip down 29% and Sezzle losing 17% before its rally on Thursday.
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